FX.co ★ USD/JPY: under pressure (July 3, 2013)

Overview:
The USD/JPY is to consolidate with bearish bias after hitting one-month high of 100.86 this morning. Underpinned by positive USD sentiment (ICE spot dollar index last 83.53 vs 82.98 early Tuesday) as bigger-than-expected 2.1% rise in U.S. May factory orders (vs +2.0% forecast) bolstered expectations that the Federal Reserve might begin reining in its $85 billion-a-month bond-buying program later this year. The USD/JPY also supported by demand from Japan importers and investment trusts; Bank of Japan's aggressive monetary easing measures to help reach its 2% inflation target. But the dollar sentiment dented as ISM-New York's Current Business Conditions index dropped to 47.0 last month, the lowest reading since May 2009--from 54.4 in May. The USD/JPY gains also tempered by Japan exporter sales; positions adjustments ahead of Thursday's U.S. July Fourth holiday; caution before Thursday's policy announcements from the European Central Bank and the Bank of England, and before Friday's critical U.S. June non-farm payrolls and unemployment report. A daily chart is positive-biased as MACD & stochastics are bullish, although latter at overbought; five-day moving average above 15-day MA and advancing.

Trading recommendation:

The pair is trading below its pivot point. The pair is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 99.1 in view, the breach of this target will move the pair further downward and you should expect the second target at 98.7. The pivot point stands at 100.35. In case the price moves in opposite direction and returns from its support and moves above its pivot point, trading in higher range will be the most favorable and buy position is recommended above its pivot with the first target at 100.8 and the second target at 101.2 .

Support levels:
S1 - 99.1
S2 - 98.7
S3 - 98.3

Resistance levels:
R1 - 100.8
R2 - 101.2
R3 - 101.7