USD/JPY is under pressure. Overnight, US stocks continued sliding amid fears about China's economy, North Korea's possible hydrogen-bomb test, and slump in oil prices. The Dow Jones Industrial Average fell 1.5% to 16,906, the S&P 500 lost 1.3% to 1,990, while the Nasdaq Composite was down 1.1% to 4,835. Nymex crude oil plunged 5.6% to $33.97 a barrel.
Gold rose 1.6% to $1,094 a troy ounce, and the benchmark 10-year Treasury yield declined to 2.177% from 2.248% in the previous session.
The US dollar kept strengthening against major commodity-related currencies, with USD/CAD rising 0.5% to 1.4071, AUD/USD falling 1.2% to 0.7071 and NZD/USD losing 1.0% to 0.6635. Meanwhile, EUR/USD gained 0.3% to 1.0778, USD/JPY dropped another 0.5% to 118.46 and GBP/USD was down 0.3% to 1.4626.
The pair keeps trading below the key resistance at 118.35 and is around the overlapping 20-period (30-minute chart) and 50-period moving averages. If it fails to break above the key resistance at 118.35 (an overlap of support and resistance seen yesterday), it should return to the first downside target at 117.25 (around yesterday's low).
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 117.25. A break of that target will move the pair further downwards to 116.75. The pivot point stands at 118.30. 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, long positions are recommended with the first target at 118.80 and the second target at 119.30.
Resistance levels: 118.80, 119.30, 119.75
Support levels: 117.25, 116.75, 116.30
The material has been provided by InstaForex Company - www.instaforex.com