USD/JPY is expected to trade with a bullish bias. The US indices closed mixed on Tuesday. Shares in the Food & Staples Retailing, Semiconductor & Semiconductor Equipment, and Retailing sectors traded higher, while shares in the Utilities, Energy and Consumer Durables & Apparel sectors got under pressure. The DJIA gained 6.49 points (less than 0.1%) to 17489.50. The S&P 500 declined 2.75 points (0.1%) to 2050.44. The Nasdaq Composite climbed 1.4 points (less than 0.1%) to 4986.01. On the economic data front, the US CPI increased 0.2% MoM in Oct following a 0.2% decline a month before. Industrial production decreased 0.2% in Oct same as last month, while economists had expected a gain of 0.1%. The US dollar reached a new seven-month high against the euro after the data release. The yield on the 10-year Treasury note slipped to 2.626% from 2.273% on Monday. US-traded crude oil fell 2.6% to $40.67 a barrel. Gold prices tumbled 1.39% to $1068.50, posting the lowest level in more than five years.The pair is trading above its rising 20-period and 50-period moving averages, which act as support and maintain the upside bias. Furthermore, the relative strength index is above its neutrality level of 50 lacking downward momentum. In addition, a support base was formed around 123, which should limit the downside potential. As long as this level is not broken, look for a further upside with targets at 123.60 and even 124.00.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 123.60 and the second target at 124.00. In the alternative scenario, short positions are recommended with the first target at 122.60 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 122.30. The pivot point is at 122.90.
Resistance levels: 123.60 124 124.45
Support levels: 122.60 122.30 121.60
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