Overview:
USD/JPY is rebounding after retreating sharply from three-day high of 102.52 on Wednesday on Nikkei's losses, drop in U.S. 10-year Treasury yield to 2.12% from 13-month high of 2.23% (after auction of $35 billion in 5-year notes saw strong demand), broad dollar-selling as investors adjust positions for month-end; rising Japanese government bond yields (10-year JGB yield finished higher at 0.935% Wednesday compared with 0.905% Tuesday). USD/JPY is also weighed by Japan exporter sales; flows to safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 2.42% to 14.83, S&P fell 0.7% overnight) amid fears that the Federal Reserve might begin pulling back its bond-buying stimulus program earlier than thought after robust U.S. economic data Tuesday. But USD/JPY losses 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 bearish outside-day-range pattern was completed on Wednesday; MACD and stochastics are in bearish mode; five-day moving average is below 15-day MA and declining.
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 favorable and buy position is recommended above its pivot with the first target at 101.8 and the second target at 102.2. You should keep in view short position below the pivot keep of the first target at 100.85, breach of this target will move the pair downward further and expect the second target at 100.55. The pivot point stands at 101.2.
Resistance levels:
R1 - 101.8
R2 - 102.2
R3 - 102.85
Support levels:
S1 - 100.85
S2 - 100.55
S3 - 100.2