USD/JPY is expected to trade in a higher range. Overnight, US stocks continued sliding on lingering worries over slowing global growth. The Dow Jones Industrial Average fell 0.5% to 16,201, paring a loss of up to 1.6% earlier in the session. The S&P 500 declined 0.3% to 1,932, and the Nasdaq Composite was down 0.4% to 4,734. Nymex crude oil gained 1.0% to $44.91 a barrel, while gold surged 2.1% to $1,154 an ounce. The 10-year Treasury yield edged down to 2.125% from 2.144% in the previous session. Meanwhile, the US dollar has been boosted by Federal Reserve Chair Janet Yellen’s statement that she is among most FOMC members who anticipate an initial interest rate increase later this year. EUR/USD dropped to the current level of 1.1173 from overnight’s high of 1.1296, and USD/JPY posted a powerful rebound to the current 120.26 from overnight’s low of 119.20. The pair is holding its gains of a powerful rebound from overnight’s low of 119.20. It is standing above the 20-period intraday moving average (MA), which has crossed the 50-period one above. And the intraday relative strength indicator (RSI) is well directed above the neutrality level of 50 calling for a new upleg. The first upside target is set at 121.35 (the high of September 23) and the second one at 121.55 (the high of September 17). Only a break below the key support at 120.35 would make the intraday outlook bearish.
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. As long as the price holds above its pivot point, long positions are recommended with the first target at 121.35 and the second target at 121.55. In the alternative scenario, short positions are recommended with the first target at 119.80 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 119.30. The pivot point is at 120.35.
Resistance levels: 121.35 121.55 122
Support levels: 119.80 119.30 118.90
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