12.06.201513:23 Forex Analysis & Reviews: Technical analysis of USD/JPY for June 12, 2015

Long-term review

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USD/JPY is expected to trade in a range. It is underpinned by weaker yen sentiment after Japanese government official suggested that Prime Minister Abe's administration was displeased with Gov. Kuroda's comment that the yen is unlikely to weaken further in terms of real effective rate. USD/JPY is also supported by the diminished investor risk aversion (VIX fear gauge eased 2.8% to 12.85; S&P 500 closed up 0.17% at 2,108.86 overnight), improved dollar sentiment (ICE spot dollar index last 95.09 versus 94.61 early Thursday), 1.2% on-month increase in U.S. May retail sales, larger-than-expected 0.4% on-month increase in US April business inventories (versus forecast +0.2%), higher-than-expected 1.3% on-month rise in US May import price index (forecast +1.0%), demand from Japan importers, and ultra-loose Bank of Japan's monetary policy

. But USD sentiment is dented by the more-than-expected 279,000 US jobless claims in the week ended on June 6 (versus forecast 275,000). USD/JPY is also limited by lower US Treasury yields (10-year slipped 9.8 bps to 2.38% Thursday), Japan's exports, and position adjustment ahead of weekend.

Technical comment: The daily chart is still negative-biased as stochastics is falling from overbought levels, the MACD is bearish, five-day moving average is falling below 15-day moving average although inside-day-range pattern was completed on Thursday.

Trading recommendations:

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 122.90. A break of that target will move the pair further downwards to 122.45. The pivot point stands at 124.10. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 124.65 and the second target at 124.95.

Resistance levels: 124.65 124.95 125.35

Support levels: 122.90 122.45 122

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