Fundamental overview:
USD/JPY is expected to consolidate with bullish bias after hitting seven-year high 115.52 on Thursday. USD/JPY is underpinned by the positive dollar sentiment (ICE spot dollar index last 88.06 after hitting four-year high 88.146 overnight, versus 87.48 early Thursday) on fewer-than-expected 278,000 U.S. jobless claims in week ended Nov. 1 (versus forecast 285,000) and stronger-than-expected 2.0% annual rate increase in U.S. 3Q non-farm productivity (versus forecast +1.5%). USD/JPY is also supported by the higher U.S. Treasury yields (10-year at 2.382% versus 2.346% late Wednesday; demand from Japan importers; ultra-loose Bank of Japan's monetary policy; yen-funded carry trades amid positive risk appetite (VIX fear gauge eased 3.53% to 13.67; S&P 500 hit record-high 2,031.61 overnight before closing up 0.38% at 2,031.21) on positive U.S. data and rising hopes for more stimulus in Europe. But USD/JPY gains are tempered by the Japan exporter sales and positions adjustment before weekend. Daily chart is positive-biased as MACD indicator is bullish, slow stochastic measure stays elevated at overbought levels, 5 and 15-day moving averages are advancing.
Technical comment:
Daily chart is mixed as MACD is bullish, 5 and 15-day moving averages are advancing but stochastics is turned bearish at overbought zone, inside-day-range pattern was completed on Tuesday.
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 long as the price is keeping above its pivot point, a long position is recommended with the first target at 116 and the second target at 116.65. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 113.80. A break of this target would push the pair further downwards and one may expect the second target at 113. The pivot point is at 114.75.
Resistance levels:
116
116.65
117
Support levels:
113.80
113
112.75
