USD/JPY is under pressure. The technical picture of USD/JPY is bearish. The pair is trading below its 50-period moving average, which should limit the upside momentum. The declining 20-period moving average maintains the downside bias. The relative strength index is below its neutrality area at 50 and lacks upward momentum. On Monday, U.S. stocks were little changed at close as losses in energy shares caused by lower oil prices were offset by gains in health-care firms. The Dow Jones Industrial Average declined 23 points (0.1%) to 18529, the S&P 500 stepped down 1 point to 2180, while the Nasdaq Composite gained 6 points (0.1%) to 5236. The U.S. dollar was largely stable as Federal Reserve Vice Chairman Stanley Fischer had earlier commented that the Fed was close to achieving its employment and inflation targets. However, traders should be holding their bets on currencies as they await Fed Chairwoman Janet Yellen's Friday speech at the monetary-policy symposium in Jackson Hole, Wyoming. U.S. government bonds rebounded as investors moved in to buy on Friday's price dip. The benchmark 10-year U.S. Treasury yield dropped to 1.541% from 1.580% in the previous session. Meanwhile, precious metals came under pressure amid a stronger U.S. dollar.
As long as 100.65 holds on the upside, the pair is likely to return to 99.990. A break below this level would open the way to further weakness toward the next support at 99.60.
Trading Recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 99.90. A break below this target will move the pair further downwards to 99.60. The pivot point stands at 100.65. If the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 100.90 and the second one at 101.20.
Resistance levels: 100.90, 101.20, 101.75
Support levels: 99.90, 99.60, 98.95
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