Overview:
USD/JPY is consolidating with bullish bias after hitting two-month high 99.80 on Tuesday. The rate is underpinned by positive dollar sentiment as Friday's stronger-than-expected October non-farm payrolls report continues to reverberate; heightened expectations that the Federal Reserve would start tapering its $85 billion-a-month quantitative easing program before the end of the year. "I don't think the circumstances rule out a consideration in December," said Dennis Lockhart, a non-voting member of the Federal Open Market Committee. USD/JPY is also supported by higher U.S. Treasury yields; demand from Japan importers. But dollar sentiment dented by drop in NFIB Index of Small Business Optimism to 91.6 in October from 93.9 in September. USD/JPY gains also tempered by Japan exporter sales; unwinding of JPY-funded carry trades amid diminished investor risk appetite (VIX fear gauge rose 2.31% to 12.82, S&P fell 0.24% overnight) on concerns that the Fed could soon reduce its stimulus bond-buying program; profit-taking on USD-longs ahead of Janet Yellen's confirmation hearing on Thursday in front of the U.S. Senate banking committee. D
Technical comment:
Daily chart is positive-biased as MACD and stochastics are bullish, although latter is at overbought; five- and 15-day moving averages are rising.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 99.8 and the second target at 100.2. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 98.85 the breach of this target will move the pair further downwards and one may expect the second target at 98.55. The pivot point stands at 99.3.
Resistance levels:
99.8
100.2
100.5
Support levels:
98.85
98.55
98.25