Overview:
USD/JPY is expected to consolidate with bearish bias after hitting five-week low at 101.24 on Monday. It is undermined by the negative dollar sentiment (ICE spot dollar index last 79.78 versus 80.04 early Monday) as worse-than-expected drop in U.S. ISM-Chicago PMI to 62.6 in June from 65.5 in May (versus 62.9 forecast) and lingering impact from last week's disappointing U.S. 1Q GDP and consumer spending data outweighed larger-than-expected 6.1% on-month increase in U.S. pending home sales index to 103.9 in May (versus +1.1% forecast) and rise in Dallas Fed's general business activity index to 11.4 in June from 8.0 in May. USD/JPY is also weighed by Japan's export sales and lower U.S. Treasury yields, diminished investor risk appetite (VIX fear gauge rose 2.75% to 11.57; U.S. stocks closed mostly lower Monday with S&P 500 down 0.04%, DJIA off 0.15%, Nasdaq up 0.23%) as caution sets in ahead of U.S. payrolls report Thursday. But USD/JPY losses are tempered by the demand from the Japanese importers.
Technical comment:
Daily chart is negative-biased as MACD and stochastics are bearish, although latter is at oversold zone, five-day moving average is below 15-day MA and is declining.
Trading recommendation:
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 101.35. A breach of this target will move the pair further downwards to 101.15. The pivot point stands at 101.65. In case the price moves in the opposite direction and bounces back from the support level, and then it moves 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 101.80 and the second target at 102.
Resistance levels:
101.80
102
102.15
Support levels:
101.35
101.15
101
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