Technical analysis of USD/JPY for January 10, 2015 Market Analysis Review

Fundamental overview:
USD/JPY is expected to trade in a lower range. Liquidity is thin in Asia on Monday as financial markets in Japan are shut for a public holiday. USD/JPY is undermined by the weaker dollar sentiment (ICE spot dollar index last 91.78 versus 92.31 early Friday) as weaker-than-expected 0.17% on-year rise in U.S. December average hourly earnings (versus forecast +0.2%) pushed back expectations for a Federal Reserve rate rise this year, overshadowing stronger-than-expected 252,000 increase in U.S. non-farm payrolls (versus +240,000 forecast) and lower-than-expected U.S. unemployment rate of 5.6% (versus forecast 5.7%). USD/JPY is also weighed by the selling of yen crosses amid decreased risk appetite (VIX fear gauge rose 3.17% to 17.55, S&P 500 closed 0.84% lower at 2,044.81 Friday) on the unexpectedly weak U.S. wage growth, lower U.S. Treasury yields (2-year at 0.577% versus 0.613% late Thursday), buy-yen orders from Japan's exporters. But USD sentiment is soothed by the larger-than-expected 0.8% increase in U.S. November wholesale inventories (versus forecast +0.4%). USD/JPY losses are also tempered by the sell-yen orders from Japan's importers and Bank of Japan's large-scale monetary easing policy.

Technical comment:
Daily chart is negative-biased as MACD and stochastics are bearish, five-day moving average is below 15-day moving average and is declining.

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 the pivot point. Short positions are recommended with the first target at 117.30. A break of this target will move the pair further downward to 117. The pivot point stands at 119. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, a long position is recommended with the first target at 119.40 and the second target at 119.95.

Resistance levels:

119.40

119.95

120.35



Support levels:

117.30

117

116.75

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