Overview:
USD/JPY is expected to trade in a higher range. Liquidity was thin as financial markets in U.S. are closed for the Independence Day holiday. USD/JPY is underpinned by positive dollar sentiment (ICE spot dollar index last 80.21 versus 79.95 early Thursday) after larger-than-expected 288,000 increase in U.S. June non-farm payrolls (versus +215,000 forecast) and lower-than-expected U.S. unemployment rate of 6.1% its lowest since September 2008 (versus 6.3% forecast), while May's jobs gain was revised up to 224,000 from 217,000 and April's improvement was upgraded to 304,000 from 282,000 and narrower-than-expected U.S. May trade deficit of $44.39 billion (versus $45.0 billion forecast). USD/JPY is also supported by the higher U.S. Treasury yields and demand from Japan's importers and yen-funded carry trades amid positive risk appetite (VIX fear gauge eased 4.62% to 10.32) as DJIA rose above 17,000 for first time, S&P 500 hit record high 1,985.59 before closing up 0.55% at 1,985.44 overnight. But USD/JPY gains are tempered by Japan's exporter sales and positions adjustment ahead weekend.
Technical comment:
Daily chart is positive-biased as stochastics is bullish, MACD histogram bars are turning positive and bullish parabolic stop-and-reverse signal was hit on Thursday.
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 102.30 and the second target at 102.45. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.65. A breach of this target would push the pair further downwards and one may expect the second target at 101.50. The pivot point is at 101.80.
Resistance levels:
102.30
102 .45
102.65
Support levels:
101.65
101.50
101.35
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