FX.co ★ USD/JPY: upside prevails

Overview

The USD/JPY to consolidate with bullish bias as markets await 12:30 GMT U.S. April non-farm payrolls (expected to have risen 148,000) & unemployment rate (expected to be unchanged at 7.6%). The USD/JPY is underpinned by improved USD sentiment after surprise 18,000 drop in latest U.S weekly jobless claims to five-year-low of 324,000 (vs 345,000 forecast), bigger-than-expected 11% contraction in U.S. trade deficit to $38.83 billion in March (vs $42.1 billion forecast), strong rise in ISM-New York's Current Business Conditions Index to 58.3 in April from 51.2 in March. The USD/JPY is also backed by yen-funded carry trades amid positive risk sentiment (S&P rose 0.94% overnight to record closing high of 1597.59) in wake of European Central Bank's interest-rate cut and better-than-forecast U.S. economic data; Bank of Japan's aggressive easing measures to help reach its 2% inflation target; demand from Japan importers and investment trusts. But the USD/JPY gains tempered by Japan exporter sales; positions adjustment before weekend. Daily chart mixed as MACD bearish; but stochastics turning neutral.

Data in focus:
14:00 GMT U.S. March factory orders, April ISM non-manufacturing composite index
16:45 GMT Fed's Lacker speaks.

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 favourable and buy position is recommended above its pivot with the first target at 98.4 and the second target at 98.65. You should keep in view short position below the pivot keep of the first target at 97.35 , breach of this target will move the pair downward further and expect the second target at 96.99. The pivot point stands at 97.65.

Resistance levels:
R1 - 98.40 (Thursday's high)
R2 - 98.65
R3 - 99.42 (April 26 high)

Support levels:
S1 - 97.35
S2 - 97.08-96.99 band (Thursday's low-Tuesday's low)
S3 - 96.55