USD/JPY is expected to continue the rebound. The pair is trading above its ascending 20-period and 50-period moving averages, which play support roles and maintain the upside bias. The relative strength index is standing firmly above its neutrality level at 50 and lacks downward momentum.
Regarding economic data, Automatic Data Processing Inc (ADP) reported that 153,000 private jobs were added in December (vs. +175,000 expected, +215,000 in November). The U.S. Labor Department said initial jobless claims amounted to 235,000 in the week ended December 31 (vs. 260,000 expected). And the Institute for Supply Management (ISM) posted its Non-manufacturing Composite Index at 57.2 (vs. 56.8 expected).
The U.S. dollar remained under heavy selling pressure as investors got more cautious on the U.S. economic outlook. The currency's slide was also attributed to funds' liquidation of long positions on the greenback. The ICE U.S. Dollar Index lost another big-point number of 102.00 as it plunged 1.2% on day to 101.52, its lowest close since December 13.
As long as 115.15 is support, look for a further upside toward 116.75 and even 117.10 in extension.
Recommendation:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 116.75 and the second one, at 117.10. In the alternative scenario, short positions are recommended with the first target at 114.70 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 114.25. The pivot point is at 115.15.
Resistance levels: 116.75, 117.10, 117.75
Support levels: 114.70, 114.25, 114.00
The material has been provided by InstaForex Company - www.instaforex.com