Fundamental overview:
USD/JPY is expected to trade with bearish bias. It is undermined by the weaker USD sentiment (ICE spot dollar index last 94.18 versus 94.92 early Thursday) on 0.8% drop in the U.S. January retail sales (versus forecast -0.5%), a rise in the U.S. jobless claims to 304,000 for the week ended on February 7 (versus forecast 290,000), 0.1% increase in the U.S. December business inventories (versus forecast +0.2%). USD/JPY is also weighed by the lower U.S. Treasury yields (10-year at 1.986% versus 2.021% late Wednesday), Japan's exports and the reports that Japan's central bank thinks any further stimulus measures would be counterproductive and consumer sentiment would be hurt by more yen weakness. But the USD/JPY losses are tempered by demand from the Japanese importers, reduced safe-haven appeal of theyen and yen-funded carry trades as global risk sentiment improves (VIX fear gauge eased 9.55% to 15.34, S&P 500 rose 0.96% to close at 2,088.48 overnight) on news that Germany and France brokered a cease-fire with Russia to end nearly a year of fighting in Ukraine, and by positions adjustment ahead of the U.S. long weekend (financial markets in the U.S. are shut on Monday for a public holiday).
Technical comment:
The daily chart is mixed as the MACD is bullish, 5 and 15-day moving averages are advancing but stochastics is turned bearish at overbought levels.
Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 118.30. A break of this target will move the pair further downward to 118. The pivot point stands at 119.30. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, a long position is recommended with the first target at 119.75 and the second target at 120.20.
Resistance levels:
119.75
120.20
120.70
Support levels:
118.30
118
117.65
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