Overview:
USD/JPY is expected to consolidate after hitting one-week high at 102.55 on Wednesday. USD/JPY is undermined by the weaker dollar sentiment (ICE spot dollar index last 80.09 versus 80.15 early Wednesday) after worse-than-expected drop in U.S. ISM non-manufacturing PMI to 51.6 in February, the lowest since February 2010 --from 54.0 in January (versus 53.5 forecast), smaller-than-expected 139,000 increase in ADP February U.S. private-sector jobs (versus +160,000 forecast). USD/JPY is also weighed by the lower U.S. Treasury yields, Japan exporter sales, subdued investor risk appetite (S&P slipped 0.01%, DJIA fell 0.22% overnight) on weak U.S. data, prospect of China's first onshore corporate bond default as concerns mount that Shanghai Chaori Solar would be unable to pay investors interest due on Friday, comment from Chinese government official Wednesday said economic growth below the government's 7.5% target will be tolerated; Federal Reserve Beige Book indicating economic activity improved in most parts of the country, but the severe wintry weather dragged on growth. But USD/JPY downside is limited by the demand from the Japan importers and loose Bank of Japan's monetary policy.
Technical сomment:
Daily chart is positive-biased as MACD and stochastics are turned to bullish.
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 103.35 and the second target at 103.70. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.30. A breach of this target will push the pair further downwards and one may expect the second target at 102.05. The pivot point is at 102.50.
Resistance levels:
103.35
103.70
104
Support levels:
102.30
102.05
107.65
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