Overview:
USD/JPY is set to trade in a higher range undermined by weaker dollar sentiment as a surprise drop in U.S. Conference Board consumer confidence index to 70.4 in November from revised 72.4 in October (against forecast for rise to 73.0) outweighs 6.2% surge in the U.S. building permits to five-year high of 1.034 million in October (versus 930,000 forecast), jump in Richmond Fed's manufacturing current business conditions index to 13.0 in November from 1.0 in October (well above forecast of 4.0) and 13.3% rise in the U.S. September S&P/Case-Shiller 20-city home price index (versus +13.1% forecast). The soft consumer confidence data raised doubts whether the U.S. economy is healthy enough for the Federal Reserve to start scaling down its bond-buying program next month. The Fed's officials have said that they could start winding down quantitative easing at its Dec. 17-18 meeting, depending on the strength of the U.S. economic data. USD/JPY also weighed by lower U.S. Treasury yields, Japanese exporter sales, profit-taking on yen shorts as trading volumes turn smaller heading into the U.S. Thanksgiving holiday Thursday. But USD/JPY losses are tempered by demand from the Japan importers, soft yen sentiment amid expectations that the Bank of Japan will take additional easing measures to counter a consumption-tax rise next April.
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 102.5 and the second target at 102.9. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 100.95 the breach of this target will move the pair further downwards and one may expect the second target at 100.65. The pivot point stands at 101.5.
Resistance levels:
102.5
102.9
103.25
Support levels:
100.95
100.65
100.35
