USD/JPY is expected to trade with a bearish bias as the key resistance at 101.60. The pair posted some technical rebounds last night, but is still trading below its key horizontal resistance at 101.60, and the upside attempts should be limited by this level. At the same time, the relative strength index is mixed to bearish, and lacks upward momentum. Even though a continuation of the technical rebound cannot be ruled out at the current stage, its extent should be limited.
On the economic data front, the U.S. Labor Department reported that initial jobless claims dropped 8,000 on week to 252,000 for the week ended September 17 (vs. 261,000 expected). The National Association of Realtors said existing home sales fell to 5.33 million units in August (vs. 5.45 million units expected) from 5.38 million units in July. The Conference Board announced that the Leading Index declined 0.2% on month in August (vs. +0.0% expected).
To conclude, as long as 101.60 is not broken up, the pair is likely to drop to 100.50 at first, if breakout, look for further decline to 100.05 as likely.
Trading Recommendation: The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 100.50. A break below this target will move the pair further downwards to 100.05. The pivot point stands at 101.60. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 102.05 and the second one at 102.35.
Resistance levels: 102.05, 102.35, 102.75
Support levels: 100.50, 100.05, 99.60
