UUSD/JPY is expected to trade with a bullish bias.Overnight, US stocks showed signs of stabilization with the Dow Jones Industrial Average rising 0.3% to 16049 and the S&P 500 gaining 0.1% to 1884. Meanwhile, the Nasdaq Composite was 0.6% down landing at 4517. Nymex crude prices added 1.7% to $45.23 a barrel, while gold was 0.4% down to $1,127 an ounce. The 10-year Treasury yield dropped further to 2.056% from 2.093% in the previous session. Meanwhile the US dollar weakened against other most major currencies as investors were waiting for Friday’s employments reports and speeches of the Federal Reserve’s officials later this week. EUR/USD rebounded to as high as 1.1267 from a session low of 1.1192, and AUD/USD ran to as high as 0.7023 from a low of 0.6934. On the other hand, the Canadian dollar kept dropping against the US dollar with USD/CAD rising as high as 1.3458, which is the highest level since June 2004. The pair remains on the upside after breaking above the upper boundary of a bearish channel. With the help of support provided by the 20- and 50-period intraday moving averages (MAs), it is approaching the first upside target at 120.45 (yesterday’s high). The intraday relative indicator (RSI) is well directed with the buying area between 50 and 70, calling for a new upleg. The second upside target is set at 120.65 (around the high of September 28).
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 120.45 and the second target at 120.65. In the alternative scenario, short positions are recommended with the first target at 119.35 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 119.20. The pivot point is at 119.75.
Resistance levels: 120.45 120.65 120.95
Support levels: 119.50 119.20 118.70
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