FX.co ★ Technical analysis of USD/JPY for February 06, 2015

Fundamental overview:

USD/JPY is expected to consolidate in a higher range as markets await the U.S. data on January nonfarm payrolls (expected to have increased by 237,000) at 13:30 GMT, unemployment rate (expected to have slipped to 5.5% from December's 5.6%) and average hourly wage (forecast +0.3%). USD/JPY is supported by the yen-funded carry trades as global risk sentiment improves (VIX fear gauge eased 8.07% to 16.85; S&P 500 closed up 1.03% at 2,062.52 overnight) on strong rally in oil prices and fewer than expected 278,000 the U.S. jobless claims for the week ended on January 31 (versus forecast 290,000). Concerns subsided over a showdown between Greece and its creditors have a certain impact too. USD/JPY is also boosted by the higher U.S. Treasury yields (10-year at 1.817% versus 1.747% late Wednesday) and the demand from Japan's importers and the ultra-loose Bank of Japan's monetary policy. But the USD/JPY gains are tempered by the Japanese exports and the weaker dollar undertone (ICE spot dollar index last 93.59 versus 94.57 early Thursday). That was caused by the U.S. December trade gap of $46.56 billion (versus forecast $38.5 billion) and a surprise 1.8% drop in the U.S. 4Q preliminary nonfarm productivity (versus forecast +0.0%) that overshadowed the upbeat jobless claims data and a 2.7% rise in the U.S. 4Q unit labor costs (versus forecast +1.2%).

Technical comment:
The daily chart is mixed as the MACD is bearish, but stochastics is neutral; five- and 15-day moving averages are meandering sideways.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 117. A break of this target will move the pair further downward to 116.55. The pivot point stands at 117.65. 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, a long position is recommended with the first target at 117.95 and the second target at 118.20.

Resistance levels:
117.95
118.20
118.45
Support levels:
117
116.55
116.80