USD/JPY is expected to trade with a bullish bias. The US stock indexes ended mixed as technology and materials shares performed poorly. The Dow Jones Industrial Average edged up 0.2% to 17758, the S&P 500 also added 0.2% to 2081, while the Nasdaq Composite was 0.2% down to 5083. NYMEX crude gained 0.8% hitting the level of $44.21 a barrel, gold edged down by 0.2% to $1089 an ounce. For the first time in seven days, US government bonds strengthened with the benchmark 10-year Treasury yield falling to 2.322% from 2.343% in the previous session.
Meanwhile the US dollar extended its consolidation during that choppy session. EUR/USD fell to a new six-month low of 1.0673 before posting a rebound as traders are focused on a speech of European Central Bank President Mario Draghi at today's Bank of England Open Forum. The pair continues to consolidate after challenging the first upside target at 123.60 on Monday. It is currently trading around the over-lapping 20- and 50-period intraday moving averages (MA). Meanwhile, the intraday relative strength index (RSI) has managed to stay above the neutrality level of 50. As long as 122.65 holds as the key support, the pair is still expected to break 123.60 before rising further to 124.00 (last seen on August 20).
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 123.60 and the second target at 124. In the alternative scenario, short positions are recommended with the first target at 122 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 121.60. The pivot point is at 122.65.
Resistance levels: 123.60 124 124.75
Support levels: 122 121.60 122.35
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