Overview:
USD/JPY is expected to trade with a bearish bias. It is undermined by the weaker USD sentiment (ICE spot dollar index last 81.31 versus 81.46 early Friday) after smaller-than-expected 209,000 increase in U.S. July non-farm payrolls (versus forecast +230,000) and higher-than-expected unemployment rate of 6.2% (versus forecast 6.1%), surprise 1.8% drop in U.S. June construction spending (versus forecast for +0.4% rise), University of Michigan final July sentiment index coming in at 81.8 (versus forecast 81.9). USD/JPY is also weighed by the lower U.S. Treasury yields, Japanese export sales and selling of yen crosses amid increasing risk aversion (VIX fear gauge rose 0.47% to 17.03, S&P 500 fell 0.29% Friday to close at 1,925.15). But USD sentiment is soothed by the stronger-than-expected rise in U.S. ISM manufacturing PMI to 57.1 in July from 55.3 in June (versus forecast 56.0), while the employment sub-index jumped from 52.8 to 58.2. USD/JPY losses are also tempered by the demand from Japanese importers.
Technical comment:
The daily chart is mixed as MACD is bullish, 5 and 15-day moving averages are advancing, but stochastics is bearish in the overbought zone.
Trading recommendations:
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 102.30. A break of this target will move the pair further downwards to 102.15. The pivot point stands at 102.75. In case the price moves in the opposite direction and bounces back from the support level, then it will move 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 103 and the second target at 103.40.
Resistance levels:
103
103.40
103.75
Support levels:
102.30
102.15
101.85
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