USD/JPY is expected to trade with a bullish bias above 110.60. Overnight U.S. stock markets were closed on the occasion of the Memorial Day holiday.In Europe, the European Commission reported that the Eurozone Consumer Confidence Indicator rose to -7 in May (the same as previously estimated) from -9.3 in April. Besides, Germany’s CPI grew 0.3% month-on-month in May (as expected, vs -0.4% in April) and was up 0.1% on-year (as expected, vs -0.1% in April). And the French government reported that GDP grew 0.6% quarter-on-quarter in 1Q (vs +0.5% previously estimated, +0.4% in 4Q).
Yesterday gold fell another 0.6% to $1,205 an ounce, chalking up a losing streak of 9 straight days shedding 5.8% or $74 an ounce. Silver plunged 1.5% to $15.97 an ounce, the lowest closing level since April 11.
Meanwhile, the U.S. dollar took a pause yesterday after last Friday’s surge, which was triggered by Federal Reserve Chairwoman Janet Yellen’s hawkish comments on rate rise. EUR/USD rebounded 0.3% to 1.1144, and GBP was up 0.1% to 1.4638 (day-low at 1.4585).
USD/JPY surged up to 111.43 yesterday before ending the day 0.8% higher at 111.11. This morning, the pair consolidated at levels below 111.00.
Although the pair continues on a consolidation initiated from yesterday’s high at 111.43, it keeps trading above the key support at 110.60. Intraday technical indicators (20-, 50-period moving averages, relative strength index) are a bit negative at the moment indicating the possibility of the consolidation. However, as long as the pair does not breach the key support at 110.60, it stands a higher chance of maintaining the bullish bias and retesting the immediate resistance at 111.45 (around yesterday’s high).
Recommendation: 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. Therefore, long positions are recommended with the first target at 111.45 and the second one, at 111.90. In the alternative scenario, short positions are recommended with the first target at 110.20 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 109.80. The pivot point is at 110.60.
Resistance levels: 111.45, 111.90, 112.35
Support levels: 110.20, 109.80, 109.10
The material has been provided by InstaForex Company – www.instaforex.com