FX.co ★ Technical analysis of USD/JPY for June 05, 2014

Overview:

USD/JPY is expected to consolidate with bullish bias after hitting one-month high at 102.80 on Wednesday as markets await Bank of England and European Central Bank's interest rate decisions. USD/JPY is underpinned by the yen-funded carry trades amid positive investor risk sentiment as U.S. stocks ended higher overnight (S&P 500 hit all-time high 1,928.63 before closing up 0.19% at 1,927.88) and positive USD sentiment (ICE spot dollar index last 80.67 versus 80.54 early Wednesday) on surprise rise in U.S. ISM non-manufacturing PMI to 56.3 in May from 55.2 in April (versus forecast for no change at 55.2), latest Federal Reserve Beige Book indicating U.S. economic activity expanded across the country. USD/JPY is also supported by the demand from Japan importers, higher longer-dated U.S. Treasury yields. But risk sentiment are dented by the smaller-than-expected 179,000 increase in ADP May private-sector payrolls (versus +210,000 forecast), wider-than-expected U.S. April trade deficit of $47.24 billion (versus forecast for $40.9 billion deficit), worse-than-expected downward revision in U.S. 1Q non-farm productivity to -3.2 % (versus -3.1% forecast) from initial estimate of -1.7%. USD/JPY gains are also tempered by the Japan exporter sales, caution before Friday's U.S. non-farm payrolls report. 

Technical comment: 
Daily chart is positive-biased as MACD and stochastics are bullish, although latter is at overbought zone, five-day moving average is above 15-day MA and is advancing.  

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 102.80 and the second target at 103.10. In the alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102. A breach of this target will push the pair further downwards and one may expect the second target at 101.80. The pivot point is at 102.25.

Resistance levels: 
102.80 
103.10 
103.45

Support levels: 
102 
101.80
101.50