Fundamental overview:
USD/JPY is expected to consolidate with bearish bias after hitting three-week low 107.53 on Thursday.It is undermined by the flows to haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge soared 24.16% to 18.76, S&P 500 plunged 2.07% to close at 1,928.21 overnight) as weak German August exports data revived worries over slowing global growth. USD/JPY is also weighed by the soft U.S. Treasury yields (10-year at 2.326% versus 2.330% late Wednesday), improved yen sentiment on larger-than-expected 4.7% on-month increase in Japan's August core machinery orders (versus forecast +1.0%) and Japan exporter sales. But USD/JPY losses are tempered by the demand from Japan importers and improved dollar sentiment (ICE spot dollar index last 85.55 versus 85.32 early Thursday) after comment from Fed's Bullard that "the markets are making a mistake" expecting the Fed to maintain its ultra-easy policy stance longer than Fed officials currently expect and fewer-than-expected 287,000 U.S. jobless claims in week ended Oct. 4 (versus forecast 292,000), larger-than-expected 0.7% increase in U.S. August wholesale inventories (versus forecast +0.4%) and positions adjustment before long weekend (financial markets in Japan and U.S. are shut Monday for public holidays).
Technical comment:
Daily chart is negative-biased as MACD and stochastics are bearish, five-day moving average is below 15-day MA and is declining.
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 107.35. A break of this target will move the pair further downwards to 107. The pivot point stands at 108. In case the price moves in the opposite direction and bounces back from the support level, then it will move 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 108.30 and the second target at 108.80.
Resistance levels:
108.30
108.80
109.25
Support levels:
107.35
107
106.75
The material has been provided by InstaForex Company - www.instaforex.com
