USD/JPY is expected to consolidate with bullish bias after hitting three-week high 108.97 on Wednesday. USD/JPY is underpinned by the positive dollar sentiment (ICE spot dollar index last 85.98 versus 85.41 early Wednesday) after the Federal Reserve confirmed the end of its monthly bond-buying program and delivered a slightly more-hawkish-than-expected policy statement as it offered a relatively optimistic assessment of the outlook for the U.S. labor market and economy. USD/JPY is also supported by the higher U.S. Treasury yields (10-year at 2.321% versus 2.284% late Tuesday), demand from Japan’s importers and ultra-loose Bank of Japan’s monetary policy. But USD/JPY gains are tempered by Japan’s exporter sales, selling of yen crosses amid diminished risk appetite (VIX fear gauge rose 5.28% to 15.15, S&P 500 closed 0.14% lower at 1,982.3 overnight) as the Fed’s latest policy statement renewed concerns over higher interest rates.
Daily chart is positive-biased as MACD and stochastics are bullish, five-day moving average is above 15-day MA and is advancing.
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 long as the price is keeping above its pivot point, a long position is recommended with the first target at 109.30 and the second target at 109.55. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 107.90. A break of this target would push the pair further downwards and one may expect the second target at 107.55. The pivot point is at 108.35.
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