Overview:
USD/JPY is expected to trade in a higher range. It is underpinned by the reduced safe-haven appeal of yen and yen-funded carry trades as global risk sentiment improves (VIX fear gauge eased 2.9% to 13.4) and U.S. stocks ended mostly higher overnight (S&P 500 rose 0.56%, DJIA gained 0.72%, Nasdaq slipped 0.32%) after Federal Reserve Chairwoman Janet Yellen gave a relatively upbeat outlook for the U.S. economy, but said her optimism hadn't changed the Fed's plans to keep short-term interest rates near zero for the foreseeable future, while worries over Ukraine eased after Russia's President Vladimir Putin said he was ready to discuss a way out of the crisis. USD/JPY is also supported by the improved dollar sentiment (ICE spot dollar index last 79.23 versus 79.14 early Wednesday) and demand from Japan importers. But USD/JPY gains are tempered by the lower U.S. Treasury yields after Yellen's dovish comments and Japan exporter sales. Yen crosses are vulnerable to China April trade balance data (exports likely declined by 3.5% on-year, imports likely fell 3.2% on-year, trade surplus likely widened to $17.3 billion from $7.71 billion).
Technical сomment:
Daily chart is still negative-biased as MACD and stochastics are in a bearish mode.
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 and the second target at 102.20. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.30. A breach of this target will push the pair further downwards and one may expect the second target at 101.05. The pivot point is at 101.50.
Resistance levels:
102
102.20
102.50
Support levels:
101.30
101.05
100.75
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