USD/JPY is expected to continue its rebound. The pair managed to post a rebound yesterday confirming the level of 107.60 as its recent low. Overnight the U.S. stocks closed higher as energy shares were boosted by a surge in oil prices. Bank and financial shares also performed well. The Dow Jones Industrial Average gained 0.9% to 17,721, the S&P 500 rose 1.0% to 2,061, and the Nasdaq Composite was up 0.8% to 4,872.
Nymex crude oil surged 4.5% to $42.17 a barrel, gold declined 0.2% to $1,256 an ounce, while the benchmark 10-year Treasury yield was up to 1.781% from 1.724% in the previous session.
On the forex front, the U.S. dollar posted a rebound against the yen after falling for seven days in a row, with USD/JPY rallying 0.6% to 108.53. EUR/USD declined 0.2% to 1.1384 in a volatile session seeing the pair swinging up to 1.1464 and down to 1.1345.
Meanwhile, driven by oil prices' upward momentum, commodities-linked currencies kept moving upwards. USD/CAD lost another 1.1% to trade at 1.2759, AUD/USD surged 1.2% to 0.7682, and NZD/USD was up 0.9% to 0.6920. Currently it remains on the upside while seeking support by the 20-period (30-minute chart) moving average, which stands above the 50-period one. The intraday relative strength index is over the neutrality level of 50 lacking downward momentum. As long as the rebound continues, the pair is expected to return to the first upside target at 109.50. Further resistance above this level would be found at 109.95.
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 109.50 and the second one, at 109.95. In the alternative scenario, short positions are recommended with the first target at 107.60 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 107. The pivot point is at 108.10.
Resistance levels: 109.50, 109.95, 110.50
Support levels: 107.60, 107, 106.15
The material has been provided by InstaForex Company - www.instaforex.com