Overview:
USD/JPY is expected to trade in a higher range. It is underpinned by the reduced safe-haven appeal of the yen and yen-funded carry trades as global risk sentiment improves (VIX fear gauge eased 9.16% to 14.18; S&P surged 1.05% overnight) after data showed China's 1Q GDP had not slowed as much as feared (grew 7.4% versus 7.3% forecast) and comment from Finance Minister Taro Aso on Wednesday that the Government Pension Investment Fund will make "a move in June," the government pension fund will buy more shares and stronger-than-expected 0.7% increase in the U.S. March industrial production (versus +0.4% forecast) and capacity utilization of 79.2% (versus 78.7% forecast); the U.S. Federal Reserve Beige Book indicating activity had recovered across the U.S. as the weather improved; Fed Chairwoman Yellen is signaling that the central bank has no plans to raise interest rates ahead of schedule. USD/JPY is also supported by the demand from Japanese importers, higher U.S. Treasury yields and positive dollar sentiment (ICE spot dollar index last 79.82 versus 79.79 early Wednesday) on strong U.S. stocks and industrial production data. But USD sentiment is dented by the smaller-than-expected a 2.8% increase in the U.S. housing starts to 946,000 in March (versus 965,000 forecast) and 2.4% drop in building permits to 990,000 (versus 1.01 million forecast). The USD/JPY gains are also tempered by Japan's exports and diminished expectations of further easing from the Bank of Japan.
Technical сomment:
Daily chart is mixed as MACD is bearish, but stochastics is rising from oversold zone.
Trading recommendation:
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 102.40 and the second target at 102.65. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.65. A breach of this target will push the pair further downwards and one may expect the second target at 101.45. The pivot point is at 101.85.
Resistance levels:
102.40
102.65
103
Support levels:
101.65
101.45
101.20