24.11.201116:37 Forex Analysis & Reviews: Fundamental Analysis, November, 24 / 2011

Overview:

USD/JPY is expected to consolidate with bearish bias. It is undermined by selling of yen crosses amid diminished investor risk appetite (VIX fear gauge rose 0.61% to 13.27, S&P 500 slipped 0.22% to close at 1,875.39 overnight) after HSBC China's April flash manufacturing PMI came in at contractionary 48.3, while U.S. new home sales unexpectedly plunged 14.5% on-month to 384,000 in March (versus 450,000 forecast). USD/JPY is also weighed by the lower U.S. Treasury yields and Japan's exports. But dollar sentiment is soothed as Markit U.S. April flash manufacturing PMI came in at 55.4, little changed from March final 55.5, but April output index was at 58.2 which is highest since March 2011 and new orders index at 58.2 is highest since May 2010. USD/JPY losses are also tempered by the demand from Japan's importers.

Technical сomment:
Daily chart is still positive-biased as MACD and stochastics is in bullish mode.

Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 101.85. A breach of this target will move the pair further downwards to 101.65. The pivot point stands at 102.40. In case the price moves in the opposite direction and bounces back from support level, and then it moves above its pivot point, it is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 102.70 and the second target at 102.95.

Resistance levels:
102.70
102.95
103.20

Support levels:
101.85
101.65
101.40