Overview:
USD/JPY is consolidating with bullish bias after hitting an eight-day high of 98.33 this morning. It is underpinned by reduced safe-haven appeal of the yen and yen-funded carry trades amid positive investor risk appetite (VIX fear gauge fell 15.92% to 16.48; S&P surged 2.18% overnight) and positive dollar sentiment (ICE spot dollar index last 80.44 versus 80.35 early Thursday) after House Republicans offer the White House a six-week extension of the nation's borrowing limit in exchange for wide-ranging negotiations on spending, although that wouldn't reopen the government. USD/JPY is also supported by demand from Japan importers, higher longer-dated U.S. Treasury yields. But USD/JPY gains are tempered by Japan exporter sales, positions adjustment before long weekend (financial markets in Japan and U.S. are shut for holiday on Monday). A larger-than-expected 66,000 increase in latest U.S. weekly jobless claims to 374,000 (versus 312,000 forecast) was ignored with much of the increase being attributed to reporting problems in California.
Technical outlook:
Daily chart is positive-biased as stochastics is rising from oversold zone; negative MACD histogram bars are contracting; bullish parabolic stop-and-reverse signal was hit Thursday.
Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As far as the price is above its pivot point, a long position is recommended with the first target at 98.7 and the second target at 99.10. In alternative scenario, if the price moves below its pivot points short positions are recommended with the first target at 97.55, the breach of this target will move the pair further downwards and one may expect the second target at 97.3. The pivot point stands at 97.85.
Resistance levels:
98.7
99.10
99.5
Support levels:
97.55
97.3
97
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