Fundamental overview:
USD/JPY is expected to trade in a higher range. It is underpinned by the reduced safe-haven appeal of the yen as global risk sentiment improves (VIX fear gauge eased 13.0% to 16.4; S&P 500 rose 1.53% to close at 2,063.15 overnight) after the European Central Bank announced a larger-than-expected bond-buying program aimed at reviving the eurozone economy. USD/JPY is also supported by the higher U.S. Treasury yields (10-year at 1.885% versus 1.851% late Wednesday), the bullish dollar sentiment (ICE spot dollar index hit nine-year high 94.497 overnight, last at 94.21 versus 92.75 early Thursday) on divergent U.S. monetary policy stance versus other major central banks, demand from Japan's importers as well as Bank of Japan's large-scale monetary easing policy. But USD sentiment is dented by the more-than-expected 307,000 U.S. jobless claims in week ended Jan. 17 (versus forecast 300,000), bigger-than-expected drop in Kansas City Fed composite index to 3 in January from 8 in December (versus forecast 7). USD/JPY gains are also tempered by the Japan's export sales and positions adjustment ahead of the weekend.
Technical comment:
Daily chart is mixed as MACD is bearish, but stochastics is rising from oversold levels.
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 118.85 and the second target at 118.35. In an alternative scenario, if the price moves below its pivot points, short posisitions are recommended with the first target at 116.80. A break of this target would push the pair further downwards and one may expect the second target at 116.30. The pivot point is at 117.20.
Resistance levels:
118.85
119.35
119.75
Support levels:
16.80
16.30
116
