USD/JPY is expected to trade with the bullish bias. The pair rebounded overnight after reaching a low of 110.63. Overnight U.S. stocks traded in narrow ranges with light volumes as investors kept standing on the sidelines waiting for some rate guidance from the Federal Reserve. The Dow Jones Industrial Average added 0.1% to 17,990, the S&P 500 rose 0.2% to 2,091, and the Nasdaq Composite was down 0.2% to 4,888.
Nymex crude oil surged 3.3% to $44.04 a barrel, gold gained 0.4% to $1,243 an ounce, and the benchmark 10-year Treasury yield climbed further to 1.931% from 1.902% in the previous session.
On the forex front, the U.S. dollar continued to weaken against most other major currencies. The British pound maintained its upward momentum on higher expectations of Britain remaining in the European Union, with GBP/USD chalking a 12-week high of 1.4638 before closing the day at 1.4580 (+0.7%).
At the same time, EUR/USD rose 0.3% to 1.1298, while USD/JPY edged up 0.1% to 111.30. Currently the pair is seeking support from the 50-period (30-minute chart) moving average. Meanwhile the 20-period moving average remains above the 50-period one. On the other hand, the intraday relative strength index is below the neutrality level of 50, indicating a lack of upward momentum for the pair. However, as long as the level of 110.75 holds as the key support, the intraday outlook continues to be bullish and the pair should re-test the first upside target at 111.80 (around the high of April 25).
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 111.80 and the second one, at 112.45. In the alternative scenario, short positions are recommended with the first target at 110.25 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 109.90. The pivot point is at 110.75.
Resistance levels: 111.80, 112.45, 112.95
Support levels: 110.25, 109.90, 109.15
The material has been provided by InstaForex Company - www.instaforex.com