USD/JPY is under pressure. The pair is trading below its key resistance at 103.50, which maintains the strong selling pressure. The downward momentum is further reinforced by the descending 50-period moving average, which maintains a downside bias. Besides, the relative strength index is below its neutrality area at 50, and lacks upward momentum. On Friday, U.S. stocks posted modest losses as a slightly-weaker-than-expected September jobs report failed to trim expectations of the Federal Reserve raising interest rates soon. The Dow Jones Industrial Average declined 28 points (-0.2%) to 18,240, the S&P 500 dropped 7 points (-0.3%) to 2,153, and the Nasdaq Composite was down 14 points (-0.3%) to 5,292.
Materials and industrial shares were the worst performers. Honeywell slipped 7.5%, the most since 2011, after the company cut its 2016 earnings forecast.
The U.S. Labor Department reported that employers added 156,000 non-farm payrolls in September, lower than +172,000 expected, and jobless rate rose to 5.0% (vs. 4.9% expected) from 4.9% in August. Growth in August payrolls was revised upward to +167,000 from +151,000.
To sum up, as long as 103.50 is not surpassed, the pair is likely to drop to 102.65, if breakout, look for further downsides to 102.30.
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 102.65. A break below this target will move the pair further downwards to 102.30. The pivot point stands at 103.50. In case 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 103.95 and the second one at 104.20.
Resistance levels: 103.95, 104.20, 104.85
Support levels: 102.65, 102.30, 102.00
The material has been provided by InstaForex Company - www.instaforex.com