The USD/JPY pair is expected to trade in higher range. Overnight major U.S. stock indexes rallied thanks to rebound of oil prices and ECB President Mario Draghi's comments hinting at more easing for Europe. Apart from energy shares, shares in consumer durables & apparel and telecoms sectors also performed well. Crude oil rebounded by 4.2% to $29.53 per barrel on Nymex . The Dow Jones Industrial Average added 0.7% to 15,882, the S&P 500 gained 0.5% to 1,868, while the Nasdaq Composite was broadly flat at 4,472.
Gold edged up less than 0.1% to $1,101 an ounce, while the benchmark 10-year Treasury yield rose to 2.021% from 1.982% in the previous session.
On the Forex front, EUR/USD posted a choppy session overnight -- it plunged to a day-low of 1.0777 after ECB chief's comments, and bounced back to as high as 1.0900 before declining again. At the same time, with oil prices' rally and short-position-covering in progress, USD/CAD continued its slide falling 1.7% to 1.4261. Meanwhile, USD/JPY gained 0.7% to 117.68, while AUD/USD rose 1.3% to 0.6996 and NZD/USD was up 1.5% to 0.6524.The pair continues on its rebound, posting a pattern of higher highs. Currently it is supported by the ascending 20-period (30-minute chart) moving average which stands above the 50-period one. The intraday relative strength index remains above the neutrality level of 50. On such a bullish background, the pair should retake the first upside target at 118.80 (around the high of January 19) before rising toward the second one at 119.15 (a key resistance seen on January 13).
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 118.80 and the second target at 119.15. In the alternative scenario, short positions are recommended with the first target at 117.45 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 117.10. The pivot point is at 118.
Resistance levels: 118.80, 119.15, 119.45
Support levels: 117.45,117.10,116.75
The material has been provided by InstaForex Company - www.instaforex.com