FX.co ★ Technical analysis of USD/JPY for August 11, 2014

Overview:

USD/JPY is expected to trade in a higher range after hitting a two-week low at 101.69 on Friday. It is underpinned by the reduced safe-haven appeal of the yen as the global risk sentiment improves (VIX fear gauge eased 5.34% to 15.77; S&P 500 rose 1.15% to close at 1,931.59 Friday) on news reports that Moscow was de-escalating its conflict with Ukraine and that Russian troops were returning to their base after military drills, and on record China July trade surplus of $47.3 billion (versus forecast $27.7 billion) as exports rose 14.5% on-year (versus forecast of +8.0%) and imports fell 1.6% (defying forecast of 3.0% increase). USD/JPY is also supported by the demand from Japanese importers. But USD/JPY gains are tempered by Japanese export sales and the weaker USD sentiment (ICE spot dollar index last 81.42 versus 81.53 early Friday) on the U.S. commitment to air strikes in Iraq. U.S. data were mixed on Friday as better-than-expected 2.5% rise in U.S. 2Q non-farm productivity (versus forecast +1.6%) offset lower-than-expected 0.6% annual rate rise in U.S. 2Q unit labor costs (versus forecast +1.2%) and smaller-than-expected 0.3% increase in U.S. June wholesale inventories (versus forecast +0.7%).

Technical comment:
The daily chart is mixed as MACD is bullish but stochastics is in a bearish mode.

Trading recommendations:
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 long as the price is keeping above its pivot point, a long position is recommended with the first target at 102.45 and the second target at 102.75. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.40. A break of this target would push the pair further downwards and one may expect the second target at 101.15. The pivot point is at 101.90.

Resistance levels:
102.45
102.75
103

Support levels:
101.40
101.15
100.75