Overview:
USD/JPY is trading with bullish bias after hitting two-week high 98.69 Wednesday. The rate is underpinned by positive dollar sentiment (ICE spot dollar index last 79.74 versus 79.61 early Wednesday) after the Federal Reserve made no change to its $85 billion-a-month bond-purchase program as expected, but reiterated the economy was improving at a "moderate" pace and noting that downside risks had diminished, despite the impact from the partial Federal government shutdown. USD/JPY is also supported by demand from Japan importers; higher U.S. Treasury yields. But dollar sentiment dented after ADP national employment report showed a smaller-than-expected 130,000 increase in U.S. private sector jobs in October (versus +150,000 forecast); lower-than-expected U.S. September core CPI of +0.1% (versus +0.2% forecast). USD/JPY gains are also tempered by Japan exporter sales; unwinding of JPY-funded carry trades amid diminished investor risk appetite (VIX fear gauge rose 1.79% to 13.65, S&P fell 0.49% overnight) as the surprisingly optimistic FOMC statement stoked worries that the Fed is closer to taper its stimulus quantitative easing program than many market participants have been expecting. Spotlight on Bank of Japan's monetary policy decision.
Technical comment:
Daily chart is positive-biased as MACD and stochastics are bullish.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 98.7 and the second target at 99. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 97.75 the breach of this target will move the pair further downwards and one may expect the second target at 97.4. The pivot point stands at 98.
Resistance levels:
98.7
99
99.3
Support levels:
97.75
97.4
97
