Fundamental Overview:
USD/JPY is expected to consolidate in a lower range. It is undermined by the unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 17.86% to 15.64, S&P 500 closed 1.62% lower at 1,965.99 overnight) as concerns linger over global economic growth and geopolitical tensions--data this week pointed to stagnating growth across Europe and China, Bank of England Gov. Mark Carney said Thursday the first interest-rate hike is inching closer, a bill introduced in Russia's parliament Wednesday would allow the government to take control of foreign assets on Russian soil, compensating Russians when their property is seized elsewhere as Western sanctions take their toll. USD/JPY is also weighed by the larger-than-expected 18.2% on-month drop in August durable goods orders (versus forecast minus 17.5%), lower U.S. Treasury yields (10-year at 2.504% versus 2.569% late Wednesday) and Japan exporter sales. But USD/JPY losses are tempered by the fewer-than-expected 293,000 U.S. jobless claims in week ended Sept. 20 (versus forecast 296,000) and the positive dollar sentiment (ICE spot dollar index last 85.19 versus 85.06 early Thursday) as the U.S. economy outperforms other major economies, ultraloose Bank of Japan's monetary policy and demand from Japanese importers and positions adjustment before the weekend.
Technical comment:
Daily chart is mixed as MACD is bullish, but stochastics is turning bearish at overbought zone.
Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 108.80. A break of this target will move the pair further downwards to 108.45. The pivot point stands at 109.50. In case the price moves in the opposite direction and bounces back from the support level, then it will moves above its pivot point. It is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 109.70 and the second target at 110.
Resistance levels:
109.70
110
110.35
Support levels:
108.80
108.45
108.20
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