USD/JPY is under pressure. The pair remains under pressure below its key resistance at 104.45, which should limit the upside room. The downward momentum is further reinforced by the descending 50-period moving average, which should push the prices lower. Besides, the relative strength index is below its neutrality area at 50, and lacks upward momentum. On Thursday, U.S. stock indexes settled lower as weaker-than-expected Chinese trade data revived concerns on global economic growth. Financial shares were under pressure as treasury yields rallied and before JPMorgan Chase, Wells Fargo and Citigroup post their results on Friday. In fact, a late-day rebound in oil prices helped stocks pare some losses.
The Dow Jones Industrial Average closed 45 points (-0.3%) lower at 18,098 having recovered from an intraday low of 17,959. The S&P 500 declined 6 points (-0.3%) to 2,132, and the Nasdaq Composite was down 25 points (-0.5%) to 5,213.
U.S. government bonds rebounded from a recent selloff pressing the benchmark 10-year Treasury yield down to 1.739% from 1.778% Wednesday.
Although the U.S. Energy Information Administration reported that crude stockpiles increased 4.9 million barrels in the week ended October 7, compared with a build of just 700,000 barrels expected, oil prices bounced as traders learned that distillates dropped 3.7 million barrels (vs. -1.6 million barrels expected) and gasoline drew 1.9 million barrels (vs. -1.5 million barrels expected).
To sum up, as long as 104.45 is not surpassed, the pair is expected to pullback to 103.55, if breakout, look for further downsides to 103.15.
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 103.55. A break below this target will move the pair further downwards to 103.15. The pivot point stands at 104.45. 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 104.80 and the second one at 105.10.
Resistance levels: 104.80, 105.10, 105.45
Support levels: 103.55, 103.15, 102.75
The material has been provided by InstaForex Company - www.instaforex.com