Overview:
USD/JPY is trading in higher range. Asia is characterized by liquidity thin today as financial markets in Japan are shut for holiday. USD/JPY is underpinned by improved dollar sentiment after U.S. Non-farm payrolls increased by more-than-expected 165,000 in April (vs. +148,000 forecast) and U.S. unemployment rate fell to 7.5% from 7.6% (vs. forecast for no change), reducing expectations that Federal Reserve would expand its bond-buying program anytime soon. USD/JPY is also supported by yen-funded carry trades amid positive risk sentiment (S&P rose 1.05% Friday to record closing high of 1614.42); Bank of Japan's aggressive easing measures to help reach its 2% inflation target; sell-yen orders from Japan importers. But dollar sentiment dented by bigger-than-expected 4.0% drop in U.S. March factory orders (vs. minus 3.0% forecast), and fall in ISM's U.S. non-manufacturing PMI to 53.1 in April (vs. 54.0 forecast) from 54.4 in March. USD/JPY gains also limited by buy-yen orders from Japan exporters. Yen crosses are vulnerable to 01:45 GMT China April services PMI data. Other data: 14:00 GMT U.S. April employment trends index. Daily chart is mixed as MACD is bearish; but stochastics is in bullish mode; possible bullish ascending flat triangle is evolving with potential for topside breakout.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in higher range as far as it remains above its pivot point. As far as the price is above its pivot point, trading in higher range is most favourable and buy position is recommended above its pivot with the first target at 99.57 and the second target at 99.77. You should keep in view short position below the pivot keep of the first target at 98.4, breach of this target will move the pair downward further and expect the second target at 97.99. The pivot point stands at 98.8.
Resistance levels:
R1 - 99.57 (April 25 high)
R2 - 99.77 (April 24 high)
R3 - 99.89-99.95 band (April 22 high-April 11 high)
Support levels:
S1 - 98.4
S2 - 97.99
S3 - 97.65