Overview:
USD/JPY is consolidating in higher range as markets await 19:00 GMT Federal Open Market Committee meeting minutes, and retail sales data for clues of when the Federal Reserve might start to scale back its $85 billion-a-month bond-buying program. USD/JPY is supported by higher U.S. Treasury yields; demand from Japan importers; weak yen sentiment amid expectations that the Bank of Japan will maintain its ultra-loose monetary policy introduced in April and keep intact its assessment on the Japanese economy as "recovering moderately" at its two-day policy meeting ending Thursday. But dollar sentiment dented by smaller-than-expected 0.4% rise in U.S. 3Q employment cost index (versus +0.5% forecast); Fed's Evans saying he doesn't think the U.S. economy is in any position for the Fed to pull back on its asset-buying program. USD/JPY upside also limited by Japan exporter sales. Spotlight also on 00:00 GMT Fed Chairman Ben Bernanke's speech.
Technical comment:
Daily chart is 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 100.45 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 99.5 the breach of this target will move the pair further downwards and one may expect the second target at 98.3. The pivot point stands at 99.6.
Resistance levels:
100.4
100.85
101.25
Support levels:
99.3
98.85
98.5
