Upside movements are expected to prevail in USD/JPY. US indices went higher on Tuesday led by shares in the banks (+4.74%), automobiles and components (+3.28%) as well as technology hardware and equipment (+3.26%) sectors. The Dow Jones Industrial Average added 2.1% to 16,865.1, the S&P 500 rose 2.4% to 1,978.3, and the Nasdaq Composite gained 2.9% to 4,689.6.
Nymex crude oil rose 1.9% to $34.40 a barrel, while gold dropped 0.3% to $1,230.80 an ounce. The yield on the 10-year Treasury note rose to nearly 1-month high at 1.835%.
On the economic data front, the US Markit manufacturing PMI slightly increased in February to 51.3 (estimated 51.2) from 52.4 in January. Manufacturing PMI in the eurozone was 51.2 in the final estimate for February vs 51 in the prior one. It was 52.3 in January. The UK manufacturing PMI declined to 50.8 in February from 52.9 in January. Economists anticipated 52.3. The dollar was up 1.1% at 113.98 yen. The euro was unchanged at $1.087. The pair is reversing up and is well supported by its rising 20-period moving average. The relative strength index still stands above 50. Further upside is therefore expected with the next horizontal resistance and overlap set at 114.50 at first. A break above this level would call for further advance towards 114.85 in extension.
Trading Recommendation:
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. Therefore, long positions are recommended with the first target at 114.50 and the second one at 114.85. In the alternative scenario, short positions are recommended with the first target at 112.50 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 112.15. The pivot point is at 113.20.
Resistance levels: 114.50, 114.85, 115.25
Support levels: 112.50, 112.15, 111.65
The material has been provided by InstaForex Company - www.instaforex.com