USD/JPY is under pressure. The pair remains on the downside after it has broken below its 50-period moving average which now plays a resistance role and maintains the bearish outlook. The relative strength index broke below a rising trend line (since Aug 10) and is below its neutrality area at 50.U.S. government bonds rallied on soft economic data with the benchmark 10-year U.S. Treasury yield easing to 1.515% from 1.575% Thursday. On the economic front, the U.S. Commerce Department reported that July retail sales were little changed in July as compared to June (vs. +0.4% expected). Excluding cars, sales declined 0.3% (vs. +0.1% expected). Another report showed that U.S. producer-price index (PPI) dropped 0.4% on month in July (vs. +0.1% expected), the biggest decline in almost a year.
As long as the resistance at 101.75 holds on the upside, the prices are likely to return to the nearest support at 100.80. A break below this level would open the way to further weakness toward the next support at 100.35.
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 100.80. A break below this target will move the pair further downwards to 100.35. The pivot point stands at 101.75. If 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 102.30 and the second one at 102.70.
Resistance levels: 102.30 , 102.70, 103
Support levels: 100.80, 100.35, 100
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