Fundamental overview:
USD/JPY is expected to consolidate with a bullish bias after hitting a three-week high 109.46 on Thursday. USD/JPY is underpinned by the report that Japan's $1.2 trillion Government Pension Investment Fund plans to lower its target allocation for domestic bonds from nearly 60% now to 35% (versus market expectations of reduction to 40%) over the medium to long term, positive dollar sentiment (ICE spot dollar index last 86.15 versus 85.98 early Thursday) after slightly more-hawkish-than-expected policy statement from the Federal Reserve on Wednesday and stronger-than-expected 3.5% annual growth in U.S. 3Q GDP (versus forecast +3.1%), although details to the report were less rosy; 250 drop in four-week moving average for U.S. initial jobless claims to 281,000 in week ended Oct. 25, the lowest average reading since May 2000. USD/JPY is also supported by the demand from Japan's importers and yen-funded carry trades amid the positive investor risk appetite (VIX fear gauge eased 4.16% to 14.52) as U.S. stocks rose overnight (S&P 500 closed up 0.62% at 1,994.65). But USD/JPY gains are tempered by Japan's export sales, lower U.S. Treasury yields (10-year at 2.308% versus 2.321% late Wednesday) after Germany's inflation data came in softer-than-expected and positions adjustment before the weekend.
Technical comment:
Daily chart 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 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 112.55 and the second target at 113.40. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 109.45. A break of this target would push the pair further downwards and one may expect the second target at 108.70. The pivot point is at 110.
Resistance levels:
112.55
113.40
113.85
Support levels:
109.45
108.70
108.35
The material has been provided by InstaForex Company - www.instaforex.com
