Overview:
The USD/JPY is to trade with risks skewed lower. The liquidity is low due to the fact that the financial markets in the U.S. are shut for holiday. The USD/JPY undermined by weaker USD sentiment (ICE spot dollar index last 83.23 vs 83.53 early Tuesday) on surprise drop in U.S. ISM non-manufacturing composite index to 52.2 in June from 53.7 in May (vs forecast for rise to 54.0) and wider-than-expected U.S. May trade deficit of $45.0 billion (vs $40.3 billion forecast). USD/JPY also weighed by Japan exporter sales. But the dollar sentiment soothed by bigger-than-expected 188,000 increase (vs +160,000 forecast) in U.S. private-sector jobs in ADP report and surprise 5,000 decrease in U.S. jobless claims to 343,000 in the week ended June 29 (vs 350,000 forecast) - the better jobs data bode well for Friday's critical U.S. June non-farm payrolls and unemployment report, raising confidence that the Federal Reserve might begin scaling down its $85 billion-a-month bond-buying program later this year.The USD/JPY losses also tempered by higher U.S. Treasury yields; demand from Japan importers; Bank of Japan's aggressive monetary easing measures to help reach its 2% inflation target. The daily chart mixed as five-day moving average above 15-day MA and advancing, MACD bullish; but bearish outside-day-range pattern completed Wednesday, stochastics turning bearish at overbought.
Trading recommendations:
The pair is trading below its pivot point. The pair is likely to trade in a lower range as far as it remains below its pivot point. The short position is recommended with the first target at 99.1 in view, the breach of this target will move the pair further downward and you should expect the second target at 98.7. The pivot point stands at 100.35. In case the price moves in opposite direction and returns from its support and moves above its pivot point, trading in higher range will be the most favorable and buy position is recommended above its pivot with the first target at 100.8 and the second target at 101.2 .
Support levels:
S1 - 99.1
S2 - 98.7
S3 - 98.3
Resistance levels:
R1 - 100.8
R2 - 101.2
R3 - 101.7
