Overview:
USD/JPY is consolidating with bullish bias. USD/JPY is undermined by flows to haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 9.79% to 13.91, S&P tumbled 1.32% overnight) as stronger-than-expected U.S. 3Q GDP growth of 2.8% (versus +2% forecast) raised concerns that the Federal Reserve will curtail its bond-buying stimulus program earlier than expected. USD/JPY is also weighed by lower U.S. Treasury yields; Japan exporter sales. But USD/JPY losses are tempered by positive dollar sentiment (ICE spot dollar index last 80.82 versus 80.50 early Thursday after hitting near-two-month high 81.46 overnight) on prospects of earlier Fed's tapering of its $85 billion-a-month quantitative easing program after strong growth data; demand from Japan importers; positions adjustment before weekend. Yen crosses are vulnerable to China October trade balance data.
Technical comment:
Daily chart is mixed as MACD is bullish; but stochastics is turned bearish at overbought, bearish outside-day-range pattern was completed on Thursday.
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 99 and the second target at 99.3. 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 98.35.
Resistance levels:
99
99.25
99.6
Support levels:
98.05
97.75
97.4
