FX.co ★ Technical analysis of USD/JPY for July 03, 2014

Overview:

USD/JPY is expected to consolidate in a higher range. USD/JPY is underpinned by the positive dollar sentiment (ICE spot dollar index last 79.95 versus 79.82 early Wednesday) after stronger-than-expected 281,000 increase in ADP June U.S. private sector jobs (versus +210,000 forecast) and rise in U.S. ISM-New York's Current Business Conditions index to 60.5 in June from 55.3 in May. USD/JPY is also supported by the demand from the Japanese importers, higher U.S. Treasury yields and yen-funded carry trades amid positive risk appetite (VIX fear gauge eased 2.96% to 10.82) as U.S. stocks mostly posted slim gains overnight with S&P 500 up 0.07%, DJIA up 0.12%, Nasdaq off 0.02%. But USD sentiment is dented by the bigger-than-expected 0.5% drop in U.S. May factory orders (versus forecast 0.4% decrease). USD/JPY gains are also tempered by Japan's exporter sales, positions adjustment ahead of U.S. long weekend (U.S. financial markets are shut for public holiday on Friday).

Technical comment:
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 102.45 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 would push the pair further downwards and one may expect the second target at 101.50. The pivot point is at 101.80.

Resistance levels:
102 .45
102.65
102.85

Support levels:
101.65
101.50
101.35