Overview:
USD/JPY is consolidating with bearish bias after hitting two-week low of 100.66 on Friday. Liquidity will be thin later in global day as financial markets in U.K. and U.S. are shut for holiday. USD/JPY is undermined by flows to safe-haven JPY and unwinding of JPY-funded carry trades as investors hedge against potential big losses in stocks amid worries that the Federal Reserve could cut back its bond purchases in coming months. This after minutes from the Fed's latest policy-setting meeting released Wednesday showed that some policymakers were considering rolling back stimulus measures as early as June, while Chairman Bernanke said the bond-buying program might be reduced "in the next few meetings." USD/JPY is also weighed by Japan exporter sales. But dollar sentiment soothed after U.S. durable goods orders rose bigger-than-expected 3.3% on month to $222.6 billion in April (vs +1.3% forecast). USD/JPY losses also tempered by demand from Japan importers; Bank of Japan's aggressive easing measures to help reach its 2% inflation target. Daily chart is negative-biased as MACD and stochastics are bearish.
Trading recommendations:
The pair is trading below its pivot point. The pair is likely to trade in lower range as far as it remains below its pivot point. Short position is recommended with the first target at 100.54 in view, breach of this target will move further the pair downward and you should expect the second target at 100.25. Pivot point stands at 101.65. In case the price moves in opposite direction and returns from its support and moves above its pivot point, then trading in higher range is the most favorable and buy position is recommended above its pivot with the first target at 102 and the second target at 102.4.
Support levels:
S1 - 100.54 (May 10 low)
S2 - 100.25
S3 - 99.95 (previous cap set April 11)
Resistance levels:
R1 - 102
R2 - 102.4
R3 - 102.59 (Friday's high)