USD/JPY is expected to trade with the bearish bias. Overnight, U.S. stocks gave back gains seen earlier in the session, as it did last Friday, and settled lower. The Dow Jones Industrial Average edged down 0.1% to 17556, the S&P 500 declined 0.3% to 2041, and the Nasdaq Composite was down 0.4% to 4833. Materials and bank shares posted gains, while consumer staples, pharmaceutical and biotech shares were losers.s.
Nymex crude oil rose another 1.6% to $40.36 a barrel, gold was up 1.4% to $1,258 an ounce, while the benchmark 10-year Treasury yield edged up to 1.724% from 1.722% last Friday.
Meanwhile, the U.S. dollar remained weak against most major currencies. USD/JPY edged down 0.1% further to 107.93, GBP/USD increased 0.8% to 1.4239, while EUR/USD edged up 7 points to 1.1406 (day-high at 1.1446, day-low 1.1371).
Commodities-linked currencies accelerated to the upside, with USD/CAD falling 0.7% to 1.2897, AUD/USD rising 0.6% to 0.7594, and NZD/USD surging 1.0% to 0.6857. The pair declined down to 107.60 yesterday. Although it is currently off yesterday's low, it remains capped by the key resistance at 108.50 lacking upward momentum. It is trading around the over-lapping 20- and 50-period (30-minute chart) moving averages (now at around 107.90). In case the recent slide resumes, the pair should break below 107.60 and sink further to the psychological level of 107.00.
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 107.60. A break of this target will move the pair further downwards to 107. The pivot point stands at 108.50. 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 109.15 and the second target at 109.95.
Resistance levels: 109.15, 109.95, 110.50
Support levels: 107.60, 107, 106.15
The material has been provided by InstaForex Company - www.instaforex.com