USD/JPY is expected to trade in a lower range as the key resistance is 109.90. Overnight U.S. stocks rebounded as oil prices surged 5% and investors judged from the latest minutes of the Federal Reserve monetary meeting that a rate rise this month is unlikely. The Dow Jones Industrial Average rose 0.6% to 17,716, the S&P 500 gained 1.1% to 2,066, and the Nasdaq Composite was up 1.6% to 4,920. Biotech and energy shares performed the best.
Nymex crude oil surged 5.2% to $37.75 a barrel, gold declined 0.7% to $1,222 an ounce, while the benchmark 10-year Treasury yield climbed to 1.753% from 1.727% in the previous session.
The U.S. dollar weakened against other major currencies after the release of the minutes of the Fed's March policy meeting, with the Wall Street Journal Dollar Index losing 0.3% to 86.48, the lowest level in almost 10 months. USD/JPY finally gave up the 110.00 psychological level by dropping 0.5% to 109.78. EUR/USD edged up 0.1% to 1.1397 (day-high at 1.1432, day-low 1.1325). GBP/USD declined 0.3% to 1.4120 (day-low at 1.4004). Along with the surge in oil prices, commodities-linked currencies rebounded, with USD/CAD falling 0.4% to 1.3087 and AUD/USD rallying 0.8% to 0.7598.The pair broke below the level of 109.90 overnight and is on the downside since then. Currently, it is capped by the descending 20-period (30-minute chart), which stands below the 50-period one. And the relative strength index is badly directed below the neutrality level of 50 calling for further decline. The intraday outlook remains very bearish, and the pair should fall towards the first downside target at 108.15.
Trading Recommendation:
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 108.15. A break of this target will move the pair further downwards to 107.70. The pivot point stands at 109.90. 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 110.50 and the second target at 111.05.
Resistance levels: 110.50, 111.05, 111.65
Support levels: 108.15, 107.70, 107
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