Overview:
USD/JPY is consolidating in a higher range after hitting a seven-week low of 95.81 Thursday. It is underpinned by reduced safe-haven appeal of yen and yen-funded carry trades as global risk sentiment improves (VIX fear gauge eased 1.93% to 12.73; S&P rose 0.39% overnight) after stronger-than-expected China July trade data suggest economic slowdown in the world's second largest economy may be coming to an end, while latest U.S. weekly jobless claims rose smaller-than-expected 5,000 to 333,000 (versus 335,000 forecast) and the four-week average of claims dropped to the lowest level since 2007. USD/JPY is also supported by demand from Japan importers and investment trusts. But USD/JPY gains are tempered by Japan exporter sales; positions adjustment before weekend. Yen crosses vulnerable to 0130 GMT China July CPI, PPI at 05:30 GMT China July fixed assets investment, industrial output, retail sales data. Daily chart is mixed as MACD is bearish, the 5- and 15-day moving averages are falling; but stochastics is turning bullish to oversold zone.
Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short positions are recommended with the first target at 95.7 in view; a breach of this target will move the pair downwards further and you should expect the second target at 95.15. The pivot point stands at 96.9. In case the price moves in the opposite direction, returns from its support, and moves above its pivot point, then trading in a higher range is the most favorable and positions buying is recommended above its pivot with the first target at 97.45 and the second target at 97.8.
Support levels:
S1 - 95.7
S2 - 95.15
S3 - 94.8
Resistance levels:
R1 - 97.45
R2 - 97.8
R3 - 98.35
