Overview:
USD/JPY is expected to consolidate in a lower range. Main spotlight is on the Bank of Japan's interest rate announcement. The BoJ is expected to leave its policy unchanged as it monitors the effects of the April 1 sales-tax increase. USD/JPY is undermined by the lower U.S. Treasury yields, negative dollar sentiment (ICE spot dollar index last 80.22 versus 80.44 early Monday) as Friday's softer-than-expected U.S. March jobs data continue to impact. USD/JPY is also weighed by Japan's exports, flows to haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 11.53% to 15.57) as weak sentiment prevailed on Wall Street (S&P fell 1.08% overnight). But USD/JPY losses are tempered by the demand from Japan's importers.
Technical сomment:
Daily chart is mixed as MACD is bullish, but stochastics is falling from overbought.
Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 101.95. A breach of this target will move the pair further downwards to 101.70. The pivot point stands at 102.65. In case the price moves in the opposite direction and bounces back from support level, and then it moves above its pivot point, it is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 103.00 and the second target at 103.45.
Resistance levels:
103
103.45
103.70
Support levels:
101.95
101.70
101.50
