Overview:
USD/JPY is expected to trade with bearish bias. It is undermined by the flows to haven yen and unwinding of yen-funded carry trades amid increased risk aversion (VIX fear gauge rose 5.56% to 14.06) on weak U.S. stocks (S&P 500 closed 0.81% lower at 1,863.4 Friday), deepening crisis in Ukraine and prospects of further Western sanctions on Russia. USD/JPY is also weighed by Japan's exports and soft dollar sentiment on lower U.S. Treasury yields and drop in Markit flash U.S. April services PMI to 54.2 from 55.3 in March. But USD sentiment is soothed by the higher-than-expected final April University of Michigan consumer sentiment index of 84.1 (versus 83.0 forecast and preliminary reading of 82.6). USD/JPY losses are also tempered by demand from Japan's importers; caution ahead of Federal Reserve's interest rate announcement on Wednesday.
Technical сomment:
Daily chart is mixed as stochastics is neutral, MACD is turning bearish.
Trading recommendation:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 102.90 and the second target at 103.20. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102. A breach of this target will push the pair further downwards and one may expect the second target at 101.85. The pivot point is at 102.15.
Resistance levels:
102.90
103.20
103.45
Support levels:
102
101.85
101.65
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