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Overview:
USD/JPY is expected to consolidate with bullish bias after hitting a five-week high at 103.17 on Thursday as markets await 1330 GMT U.S. February nonfarm payrolls (expected to increase by 152,000) and unemployment rate (expected to slipped to 6.5% from 6.6% the month before). USD/JPY is underpinned by the buying of yen crosses amid improved risk appetite (S&P hit record-high 1881.94 before closing up 0.17% at 1877.03 overnight) after U.S. jobless claims in the week ended March 1 fell more-than-expected 26,000 to 323,000 (versus 335,000 forecast), and Japan's government revealed a plan to diversify the portfolio of its giant pension fund to nonbond vehicles, fueling expectations for large-scale stock purchases. USD/JPY is also supported by the higher U.S. Treasury yields,demand from Japan importers and investment trusts and loose BOJ monetary policy. But risk sentiment are dented (VIX fear gauge rose 2.3% to 14.21) by the lingering concerns over Ukraine as politicians in Crimea voted to become part of Russia and U.S. authorized sanctions over the crisis. Eyes are also on Chinese solar-equipment maker Chaori Solar for possible China's first onshore corporate bond default if the company couldn't meet today's deadline to pay interest on its debt. USD/JPY gains are also tempered by Japan exporter sales and negative dollar sentiment (ICE spot dollar index last 79.64 versus 80.09 early Thursday) on lower U.S. 4Q revised nonfarm productivity of 1.8% (versus initial estimate of 3.2% and forecast of 1.9%), bigger-than-expected 0.7% drop in U.S. January factory orders (versus minus 0.3% forecast) and positions adjustment before weekend.
Technical сomment:
Daily chart is positive-biased as MACD and stochastics are bullish and five-day moving average is rising above 15-day MA.
Trading recommendation:
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 103.35 and the second target at 103.70. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.30. A breach of this target will push the pair further downwards and one may expect the second target at 102.05. The pivot point is at 102.60.
Resistance levels:
103.35
103.70
104
Support levels:
102.30
102.05
107.65
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