Overview:
USD/JPY is trading with risks skewed lower. The rate is undermined by negative dollar sentiment (ICE spot dollar index hit near-nine-month low 79.182 overnight; last 79.26 versus 79.69 early Tuesday) as expectations for the Federal Reserve to start tapering its $85-billion-a-month bond-purchase program were pushed back further to 2014 after smaller-than-expected 148,000 increase in U.S. September non-farm payrolls (versus +180,000 forecast), although the unemployment rate eased to 7.2%, defying forecast for no change at 7.3%. USD/JPY is also weighed by lower U.S. Treasury yields; Japan exporter sales. But USD/JPY losses are tempered by demand from Japan importers; reduced safe-haven appeal of yen and yen-funded carry trades amid positive global risk sentiment (S&P hit fresh record high overnight, closed up 0.57%) as the weaker-than-expected payrolls growth in September bolstered expectations that the Fed will continue its current easy money policies.
Technical comment:
Daily chart is mixed as MACD is bullish; but 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 97.1 in view; a breach of this target will move the pair further downwards to 96.8. The pivot point stands at 97.55. In case the price moves in the opposite direction, bounces back from support, and moves above its pivot point, the price is most favorably expected to move further to the upside. In that scenario a long position is recommended with the first target at 97.8 and the second target at 98.2.
Support levels:
97.1
96.8
96.5
Resistance levels:
97.8
98.2
98.5
