Fundamental outlook:
USD/JPY is expected to trade in lower range. It is undermined by the weaker dollar sentiment (ICE spot dollar index last 97.31 versus 98.04 early Thursday) on the back of a larger-than-expected fall in the US new home sales (versus forecast -3.5%) by 11.4% in March, more-than-expected 295,000 US jobless claims in a week ended April 18 (versus forecast 290,000), weaker-than-expected April Markit US flash manufacturing PMI at 54.2 (versus forecast 55.7). USD/JPY is also weighed by the lower US Treasury yields (10-year fell 1.5 bps overnight to 1.957%) and Japan export sales. But USD/JPY losses are tempered by the demand from Japan importers, ultra-loose Bank of Japan's monetary policy, and yen-funded carry trades amid positive investor risk appetite (VIX fear gauge eased 1.81% to 12.48). As the US stocks rose overnight (S&P 500 hit record high 2,120.49 Thursday before closing up 0.24% at 2,112.93) on the back of a surge in oil prices to their best levels of the year (Nymex crude settled up $1.58 at $57.74/bbl Thursday) and positions adjustment ahead of the weekend.
Technical comment:
The daily chart is mixed as stochastics is in bullish mode, but the MACD is still bearish.
Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 119.10. A break of that target will move the pair further downwards to 118.75. The pivot point stands at 119.75. 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, long positions are recommended with the first target at 120.10 and the second target at 120.45.
Resistance levels:
120.10
120.45
120.85
Support levels:
119.10
118.75
117.35
