Overview:
USD/JPY is consolidating after hitting two-month high of 100.43 on Friday. The rate is supported by yen-funded carry trades amid positive risk sentiment (VIX fear gauge eased 1.46% to 12.19; S&P rose 0.42% Friday to record-high close of 1,798.18) on prospects for continued central-bank stimulus efforts as comments from Janet Yellen, President Obama's nominee to lead the central bank after Ben Bernanke steps down in January, raised expectations that the Fed is not in a hurry to scale back its bank's $85 billion-a-month bond-buying program; weak yen sentiment amid speculation that Japan would adopt further easing measures after last week's dismal 3Q GDP data. USD/JPY is also buoyed by demand from Japan importers and investment trusts. But USD/JPY gains are tempered by Japan exporter sales; weaker dollar sentiment after surprise 0.1% drop in U.S. October industrial production (versus forecast for 0.2% increase); Empire State manufacturing activity index unexpectedly turned negative in November with a reading of minus 2.2 (versus plus 5.5 forecast); U.S. import prices fell steeper-than-expected 0.7% in October (versus forecast 0.4% drop).
Technical comment:
Daily chart is still positive-biased as MACD is bullish, stochastics stays elevated at overbought; 5- and 15-day moving averages are advancing.
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 100.5 and the second target at 100.85. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 99.3 the breach of this target will move the pair further downwards and one may expect the second target at 98.85. The pivot point stands at 99.75.
Resistance levels:
100.55
100.85
101.25
Support levels:
99.3
98.85
98.55
