Overview:
USD/JPY is trading with bearish bias. The rate is underpinned by positive dollar sentiment on stronger-than-forecast U.S. economic data: U.S. durable goods orders rose 3.6% in May (vs. +3.2% forecast); U.S. Conference Board's consumer confidence index unexpectedly increased to five-year high of 81.4 in June (vs. 75.5 forecast) from May's revised 74.3 (originally reported as 76.2); U.S. new home sales climbed 2.1% in May to 476,000 (vs. 462,000 forecast), their highest levels since mid-2008; Richmond Fed's manufacturing current business conditions rebounded to 8 in June--its highest reading since November 2012--from minus 2 in May. USD/JPY is also supported by higher U.S. Treasury yields as upbeat U.S. economic data heightened odds that Federal Reserve would scale down its asset-purchase program; demand from Japan importers and investment trusts; Bank of Japan's ultra-loose monetary policy to help reach its 2% inflation target; reduced safe-haven appeal of yen and yen-funded carry trades as global risk sentiment improves (VIX fear gauge eased 8.16% to 18.47; S&P rose 0.95% overnight) after central bankers across the globe moved to soothe investors' fears that monetary policy would be tightened sooner rather than later, while China's central bank said rates would be guided to a "reasonable range" and it would lend further support to stronger banks if they face a shortage of funds going forward, easing concerns over rising interbank lending rates and a liquidity crunch. But USD/JPY gains are tempered by Japan exporter sales. Data focus: 12:30 GMT U.S. 1Q GDP (3rd estimate). Daily chart is positive-biased as MACD and stochastics are bullish, five-day moving average is above 15-day MA and advancing.
Trading recommendation:
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 96.35 in view, breach of this target will move the pair further downward and you should expect the second target at 96.2. Pivot point stands at 98.3. In case the price moves in opposite direction and returns from its support and moves above its pivot point, trading in higher range is the most favorable and buy position is recommended above its pivot with the first target at 98.7 and the second target at 99.25.
Support levels:
S1 - 96.8
S2 - 96.2
S3 - 95.75
Resistance levels:
R1 - 98.7
R2 - 99.25
R3 - 99.5
