Fundamental Overview:
USD/JPY is expected to consolidate with bullish bias after hitting near-six-year high at 107.20 on Thursday.It is underpinned by the higher U.S. Treasury yields (10-year at 2.551% versus 2.543% late Wednesday) amid speculation that the Federal Reserve might sound more hawkish in next week's policy statement and might raise interest rates sooner than the middle of next year that markets had been anticipating. USD/JPY is also supported by the demand from Japan importers. But USD sentiment is dented by the more-than-expected 315,000 U.S. jobless claims in week ended Sept. 6 (versus forecast 300,000). USD/JPY gains are also tempered by Japanese export sales and Bank of Japan Gov. Kuroda saying Thursday that "there's no need to discuss additional easing for now since prices are on steady track to achieving its 2.0% inflation target", EU unveiling fresh sanctions on Russia over Ukraine and positions adjustment ahead of Japan's long weekend (financial markets in Japan are shut on Monday for a public holiday).
Technical comment:
The daily chart is positive-biased as MACD is bullish, stochastics stays elevated in the overbought zone, 5 and 15-day moving averages are advancing.
Trading recommendations:
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 long as the price is keeping above its pivot point, a long position is recommended with the first target at 107.50 and the second target at 107.85. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 106.60. A break of this target would push the pair further downwards and one may expect the second target at 106.20. The pivot point is at 106.90.
Resistance levels:
107.50
107.85
108.15
Support levels:
106.60
106.20
106
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