Overview:
USD/JPY is consolidating after hitting seven-day high 98.29 Thursday. The rate is underpinned by broadly stronger demand for dollar as U.S. Treasury yields rose sharply after Federal Reserve Chairman Bernanke said Wednesday bond-buying by the U.S. central bank could be slowed this year and end altogether around middle of next year. Dollar sentiment was also boosted after U.S. existing home sales surged 4.2% in May to 5.18 million (vs forecast for just 0.6% rise to 5.0 million); Philadelphia Fed' business condition index jumped to 12.5 in June--its highest level since April 2011--from negative 5.2 in May. USD/JPY also buoyed by demand from Japan importers and investment trusts. But dollar sentiment dented by bigger-than-expected 18,000 increase in U.S. jobless claims to 354,000 in the week ended June 15 (vs 340,000 forecast), smaller-than-expected 0.1% rise U.S. Conference Board's leading index in May (vs +0.2% forecast). USD/JPY gains are also limited by Japan exporter sales; flows to haven JPY amid increased risk aversion (VIX fear gauge surged 23.08% to 20.48, S&P tumbled 2.5% overnight) as anxiety mounted over the potential for the Fed to pull back its stimulus efforts, and on a slowdown in the Chinese economy--HSBC flash China manufacturing PMI slumped to 48.3 in June from an already weak 49.2 reading in May; positions adjustment before weekend. Event focus: Bank of Japan Governor Haruhiko Kuroda speech. Daily chart is still positive-biased as stochastics is rising from oversold, negative MACD histogram bars are contracting.
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 98.5 and the second target at 99.25. You should keep in view short position below the pivot keep of the first target at 95.85, breach of this target will move the pair downward further may expect the second target at 95.25. The pivot point stands at 96.8.
Resistance levels:
R1 - 98.5
R2 - 99.25
R3 - 99.75
Support levels:
S1 - 95.85
S2 - 95.25
S3 - 94.75