Overview:
USD/JPY is trading in a lower range. It is supported by weak dollar sentiment (ICE spot dollar index last 80.53 versus 80.34 early Thursday) after latest U.S. weekly jobless claims dropped by 5,000 to 305,000 (well below 330,000 forecast), while the four-week moving average of jobless claims fell by 7,000 to 308,000, the lowest level since June 2007. USD/JPY is also supported by higher U.S. Treasury yields, demand from Japan importers and investment trusts, yen-funded carry trades amid improved risk appetite (S&P gained 0.35% overnight) as investors bet that Congress would likely pass the U.S. budget to avoid a government shutdown on October 1, despite ongoing brinkmanship in Washington, Kyodo News report that the Japanese government will "urgently consider" cutting corporate tax as part of a government stimulus package likely to be announced next week. But the dollar sentiment dented after third estimate of U.S. 2Q GDP came in unchanged from last month's reading of 2.5% (versus 2.8% expected); drop in Kansas City Fed's manufacturing composite index to 2 in September from 8 in August, 1.6% fall in U.S. pending home sales index to 107.7 in August (versus minus 1.5% forecast). USD/JPY gains are tempered by Japan exporter sales, positions adjustment before weekend. Daily chart is mixed as bullish outside-day-range pattern was completed Thursday. MACD is bearish, stochastics is neutral.
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. A short position is recommended with the first target at 98.2 in view; a breach of this target will move the pair further downwards to 98. The pivot point stands at 98.85. In case the price moves in the opposite direction, bounces back from support, and moves above its pivot point, then the price is most favorably expected to move further upside, In that scenario a long position is recommended with the first target at 99.15 and the second target at 99.35.
Support levels:
98.2
98
97.75
Resistance levels:
99.15
99.35
99.75
