USD/JPY is expected to trade with bullish bias. From a technical view, the pair pulled back yesterday from its recent top at 104.90, and is now testing the nearest support at 103.75. The 20-period moving average is now turning down, calling for caution. As long as 103.75 holds on the downside, look for a new rebound to 104.45 and 104.90 in extension. On Tuesday, U.S. stocks slipped, dragged by some blue chips' lowered forecasts and weaker-than-expected consumer confidence. The Dow Jones Industrial Average declined 53 points (-0.3%) to 18,169, the S&P 500 dropped 8 points (-0.4%) to 2,143, while the Nasdaq Composite was down 26 points (-0.5%) to 5,283.
The U.S. dollar eased from recent highs against the euro, British pound and Japanese yen overnight after Bank of England Governor Mark Carney signaled that the chances of another interest-rate cut this year are diminishing. The ICE U.S. Dollar Index marked a session-high of 99.119, the highest intraday level since February 1, before settling at 98.719, down from 98.756 Monday.
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 104.45 and the second one at 104.90. In the alternative scenario, short positions are recommended with the first target at 103.50 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 103.20. The pivot point lies at 103.75.
Resistance levels: 104.45, 104.90, 105.20
Support levels: 103.50, 103.20, 102.85
The material has been provided by InstaForex Company - www.instaforex.com