Overview:
USD/JPY is trading in lower range. The rate is undermined by flows to safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 12.18% to 16.3, S&P fell 1.43% Friday) as uncertainty grew over the outlook for U.S. monetary policy. USD/JPY is also weighed by Japan exporter sales. But risk sentiment soothed by surprise rise in China's CFLP manufacturing PMI to 50.8 in May from 50.6 in April (vs forecast for drop to 49.8). USD/JPY losses also tempered by demand from Japan importers; Bank of Japan's aggressive easing measures to help reach its 2% inflation target; improved dollar sentiment as bigger-than-expected rise in Chicago PMI to 58.7 in May (vs 50.3 forecast) from 49.0 in April and higher-than-expected University of Michigan final-May consumer sentiment index (came in at 84.5 vs 83.7 forecast) overshadowed weaker-than-expected U.S. April personal income (flat vs +0.1% forecast) & spending (fell 0.2% vs +0.1% forecast). Yen crosses vulnerable to 0145 GMT May HSBC China manufacturing PMI data. Other data: 1300 GMT U.S. May Markit manufacturing PMI, 1400 GMT U.S. April construction spending, May ISM manufacturing PMI. Daily chart negative-biased as MACD & stochastics bearish; five-day moving average below 15-day MA and declining.
Trading recommendations:
The pair is trading below its pivot point. The pair is likely to trade in lower range as far as it remains below its pivot point. Short position is recommended with the first target at 100.1 in view, breach of this target will move further the pair downward and you should expect the second target at 99.7. Pivot point stands at 100.8. In case the price moves in opposite direction and returns from its support and moves above its pivot point, then trading in higher range is the most favorable and buy position is recommended above its pivot with the first target at 101.3 and the second target at 101.8.
Resistance levels:
R1 - 101.3
R2 - 101.8
R3 - 102.2
Support levels:
S1 - 100.1
S2 - 99.7
S3 - 99.5
