USD/JPY is expected to trade in a lower range as the key resistance is at 117.95. Overnight, US stocks rebounded over 1% as energy shares surged on oil prices’ stabilization. Pharmaceutical and software shares also performed well. The Dow Jones Industrial Average rose 1.4% to 16,379, the S&P 500 gained 1.7% to 1,921, while the Nasdaq Composite was up 2.0% to 4,615.
Nymex crude oil increased 2.4% to $31.20 a barrel, gold gave up 1.5% to $1,076 an ounce, while the benchmark 10-year Treasury yield edged up to 2.100% from 2.070% in the previous session.
The US dollar remained firm with EUR/USD edging down 0.1% to 1.0864 and USD/JPY rising 0.3% to 118.04. At the same time, USD/CAD gained another 0.2% to 1.4364 and NZD/USD was down 0.7% to 0.6468. The pair posted a choppy trading session yesterday and stopped advancing before the key resistance at 117.95. Currently, it is seeking support from the 20-period (30-minute chart) moving average. Though the intraday relative strength index is above the neutrality level of 50, it shows lack of upward momentum. As long as 117.95 holds as the key resistance, the pair is expected to return to the first downside target at 116.80 before sinking further toward 116.50 (reaction low seen yesterday).
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 116.80. A break of that target will move the pair further downwards to 116.50. The pivot point stands at 117.95. 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 118.35 and the second target at 118.60.
Resistance levels: 118.35, 118.60, 119
Support levels: 116.80, 116.50, 116
The material has been provided by InstaForex Company – www.instaforex.com