USD/JPY is expected to trade with bullish bias. The pair gapped up at today's open, breaking above the key resistance at 105.10 and turning the intraday outlook bullish. Currently, the pair is trading around the 20-period (30-minute chart) moving average. Meanwhile, the intraday relative strength index landed on the neutrality level of 50, showing a lack of downward momentum for the pair. As long as the level at 105.10 (around the low of July 15) holds as the key support, the pair could retest the first upside target at 106.30 (around the high of July 15).
Market Commentary :
On Friday, the Dow Jones Industrial Average added 10 points to another record-high of 18,516, extending a streak of the record closing-levels to 4 straight sessions. On the other hand, the S&P 500 declined 0.1% to 2,161 after marking fresh all-time highs in the prior four sessions. The Nasdaq Composite was also down 0.1% to 5,029. Materials and utilities shares advanced, while consumer discretionary, financial, and technology shares declined.
European stocks were broadly lower, with the STOXX Europe 600 falling 0.2%. Meanwhile, the U.K.'s FTSE 100 gained 0.2%.
On the economic front, in the US, retail sales grew 0.6% month-on-month in June (vs. +0.1% expected), CPI rose 0.2% month-on-month (vs. +0.3% expected) and 1.0% year-on-year (vs. +1.1% expected) in June, industrial production increased 0.6% month-on-month in June (vs. +0.3% expected), the New York Fed's Empire Manufacturing Index posted 0.55 in July (vs. 5.00 expected), and the University of Michigan Consumer Sentiment Index was at 89.5 in July (vs. 93.5 expected).
The benchmark US 10-year Treasury yield rose to 1.597% from 1.529% on Thursday. Nymex crude oil climbed 0.6% to $45.95 a barrel. Gold edged up 0.2% to $1,337 an ounce (one-day low at $1,322), while silver slid 0.5% to $20.20 an ounce (one-day low at $19.96).
On forex trading, the US dollar firmed up against most major currencies. GBP/USD plunged 1.1% to 1.3191 (a day high at 1.3480) after Bank of England Chief Economist Andrew Haldane pointed out that the central bank should come up with a package of monetary policy easing measures in its rate-setting meeting on August 4.
EUR/USD fell 0.8% to 1.1034 (intraday day high at 1.1148), while USD/JPY was down 0.5% to 104.83. As a result ,the ICE Dollar Index gained 0.5% to 96.58.
Commodities-linked currencies were broadly weaker against the greenback. The Canadian dollar halted a 3-day winning streak with USD/CAD rebounding 0.6% to 1.2968. AUD/USD fell 0.7% to 0.7577. NZD/USD plunged 1.2% to 0.7109, losing a total of 2.6% or 186 pips in a 3-day losing streak.
Recommendations:
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 106.30 and the second one, at 107.00. In the alternative scenario, short positions are recommended with the first target at 104.60 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 103.90. The pivot point is at 105.10.
Resistance levels: 106.30, 107.00, 107.45
Support levels: 104.60, 103.90, 103
The material has been provided by InstaForex Company - www.instaforex.com