USD/JPY is expected to trade with bullish bias above 114.70. The pair stands firmly above its key support at 114.80 and remains on the upside, backed by its rising 50-period moving average. In addition, the relative strength index is above its neutrality level at 50.
The recent US economic data were robust. The Commerce Department reported the housing starts increased by 11.3% on month to seasonally adjusted annual rate of 1.23 million (vs. +10.1% to 1.20 million expected). Moreover, the Labor Department said the initial jobless claims decreased to 234,000 in the week ended January 14 (vs. 252,000 expected).
Hence, as long as 114.80 holds as a key support, look for a further rise to 115.60, and even to 116.00 as possible.
Recommendation:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 115.60 and the second one at 116.00. In the alternative scenario, short positions are recommended with the first target at 114.40 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 113.80. The pivot point is at 114.80.
Resistance levels: 115.60, 116.00 , 116.45
Support levels: 114.40 , 113.80, 113.40
