USD/JPY is expected to trade with a bullish bias above 113.00. Last Friday, the US stocks rallied over 1%, lifted by financial and energy shares. The Dow Jones Industrial Average rose 1.3% to 17213, the S&P 500 gained 1.6% to 2022, and the Nasdaq Composite was up 1.9% to 4748.
Nymex crude oil increased 1.7% to $38.50 a barrel, gold lost 1.8% to $1248 an ounce, while the benchmark 10-year Treasury yield rose further to 1.977% from 1.927% Thursday.
On the forex front, the euro gave back some gains made against the US dollar in the previous session, with EUR/USD declining 0.2% to 1.1150. And USD/JPY was up 0.6% to 113.80. On the other hand, GBP/USD rose a further 0.8% to 1.4385, AUD/USD surged 1.5% to 0.7563 and NZD/USD was up 1.3% to 0.6750. Meanwhile, USD/CAD lost 1.0% to settle at 1.3208, below the 200-day moving average again.
Traders should be shifting focus to this week's Federal Reserve monetary policy meeting.The pair has found the key support at 113.00, trading around the 20-period (30-minute chart) moving average, which stands above the 50-period one. As long as the bullish bias is maintained, the pair is expected to proceed toward the first upside target at 114.25 (a key resistance tested repeatedly within the month) and in extension the second one at 114.50.
Trading 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 114.25 and the second one at 114.50. In the alternative scenario, short positions are recommended with the first target at 112.70 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 112.20. The pivot point is at 113.
Resistance levels: 114.25, 114.50, 114.85
Support levels: 112.70, 112.20, 111.85
The material has been provided by InstaForex Company - www.instaforex.com