Overview:
USD/JPY is trading in higher range. USD/JPY is supported by increased dollar demand after comment from Fed's Bullard that a cutback on bond buying is on the table for December and release of the minutes for the Federal Reserve's October policy meeting fanned anxiety that the Fed could taper its bond-buying soon. In the FOMC minutes, Fed officials said a strengthening economy may allow the central bank to cut the pace of its $85 billion monthly bond purchases in "coming months," and mulled a reduction in purchases before "unambiguous further improvement" was visible in the labor-market outlook. Dollar sentiment also boosted after stronger-than-expected 0.4% rise in U.S. October retail sales (versus +0.1% forecast). USD/JPY is also supported by higher U.S. Treasury yields; demand from Japan importers. But USD/JPY upside is limited by Japan exporter sales; unwinding of JPY-funded carry trades amid increased risk aversion (S&P fell 0.36% overnight) of fears of earlier withdraw of Fed's stimulus. Yen crosses are also vulnerable to 01:45 GMT November HSBC China flash manufacturing PMI data.
Technical comment:
Daily chart is positive-biased as MACD is bullish, stochastics stays elevated at overbought, 5- and 15-day moving averages 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 101.25 and the second target at 101.55. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 99.8 the breach of this target will move the pair further downwards and one may expect the second target at 99.5. The pivot point stands at 100.2.
Resistance levels:
101.25
101.55
101.9
Support levels:
99.8
99.5
99.25
