USD/JPY is expected to trade in a higher range and is supported by a rising trend line. On Wednesday, US stock indices kept rallying along with global markets, led by financial and energy shares. The Dow Jones Industrial Average gained another 1.6%, climbing to 17694, the S&P 500 rose 1.7% to 2070, and the Nasdaq Composite was up 1.9% to 4779.
European stocks continued their rebound, with the Stoxx Europe 600 adding 3.1%.
Government bonds extended losses, with the benchmark US 10-year treasury yield rising further to 1.477% from 1.463% Tuesday. Nymex crude oil surged 4.2% to $49.88 a barrel, and gold gained 0.5% to $1319 an ounce.
On the forex front, the US dollar remained under pressure as the British pound and the euro rebounded for a second session. GBP/USD rose 0.6% to 1.3424 (day-high at 1.3533), and EUR/USD added 0.5% to close at 1.1123.
On the other hand, USD/JPY edged up to 102.81 from 102.74 Tuesday.
Commodities-linked currencies also rose for a second session in a row. The Canadian dollar was boosted by surging oil prices, with USD/CAD dropping 0.7% to 1.2929. The pair has failed to break above its 200-day moving average in recent attempts. The pair did finish a consolidation with a positive tone yesterday as the bullish trend line drawn from June 27 remained intact. While still enjoying support provided by that rising trend line, the pair is currently trading on the upside, and intraday technical indicators (20-, 50-period moving averages, relative strength index on a 30-minute chart) are well oriented suggesting continued upward momentum. As long as the bullish bias is maintained, the pair is on track to re-visit the first upside target at 103.30 (a level of overlapping support and resistance seen on June 24). Key support has been raised to 102.15.
Recommendations:
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 103.30 and the second one, at 104.25. In the alternative scenario, short positions are recommended with the first target at 101.70 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 101.40. The pivot point is at 102.15.
Resistance levels: 103.30, 104.25, 105.00
Support levels: 101.70, 101.40, 100.80
The material has been provided by InstaForex Company - www.instaforex.com