Technical analysis of USD/JPY for July 17, 2014 Trend News

'Overview:

USD/JPY is expected to consolidate after hitting a one-week high at 101.79 on Wednesday. It is underpinned by the yen-funded carry trades amid the positive risk sentiment (VIX fear gauge eased 8.03% to 11.0; S&P 500 rose 0.42% to close at 1,981.57 overnight) as stronger-than-expected China 2Q GDP growth upgrades outlook for the global economy, raft of upbeat news from U.S. companies and Fed Chairwoman Yellen in her second day of Congressional testimony telling lawmakers that asset valuations in general are not out of line with historical norms. USD/JPY is also supported by the demand from Japanese importers, the positive dollar sentiment (ICE spot dollar index last 80.53 versus 80.38 early Wednesday) on comments from Yellen that U.S. interest rates could rise sooner than expected if figures for inflation and jobs continue to improve; stronger-than-expected rise in U.S. NAHB housing market index to six-month high of 53 in July from 49 in June (versus 50 forecast), higher-than-expected U.S. June PPI of +0.4% on-month (versus +0.3% forecast), Federal Reserve Beige Book indicating that the labor market is improving across the U.S. But the USD sentiment is dented by weaker-than-expected 0.2% on-month rise in U.S. June industrial production (versus +0.3% forecast) & lower-than-expected capacity utilization of 79.1% (versus 79.2% forecast). USD/JPY upside move is also limited by Japanese export sales; lower longer-dated U.S. Treasury yields as the yield curve flattened overnight.

Technical comment:
The daily chart is tilting positive as stochastics is in bullish mode, MACD is turning bullish.

Trading recommendations:
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 101.85 and the second target at 102.05. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.20. A break of this target would push the pair further downwards and one may expect the second target at 101.05. The pivot point is at 101.40.

Resistance levels:

101.80

102.05

102.25

Support levels:

101.20

101.05

100.80

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