USD/JPY is expected to trade in a lower range as key resistance is set at 113.20.Last Friday U.S. stocks held steady, with the Dow Jones Industrial Average easing 0.1% to 16391, the S&P 500 being flat at 1917, and the Nasdaq Composite gaining 0.4% to 4504. The U.S. government reported that CPI excluding food and energy grew 2.2% on-year in January, the most since June 2012, suggesting that the Federal Reserve still has grounds to raise interest rates within the year.
Nymex crude oil lost 3.7% to $29.64 a barrel, gold declined 0.3% to $1,228 an ounce, while the benchmark 10-year Treasury yield eased to 1.750% from 1.762% in the previous session.
On the forex front, GBP/USD gained 0.5% to 1.4404 last Friday as the British Prime Minister struck a deal concerning membership terms with European Union leaders. However this morning it reversed course to drop over 1.0% down to 1.4230 after London Mayor Boris Johnson voiced his support for Britain to leave the EU in a June referendum. The pair is posting a rebound after testing the first downside target at 112.35. Currently, it is challenging the 50-period (30-minute chart) on the upside. However, the key resistance at 113.20 (which the pair had repeatedly failed to break above) remain a cap to any upside potential. If the pair fails again to surpass 113.20, expect a return to 112.35 and in extension to 111.65 (a level of over-lapping support and resistance seen on February 12).
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 112.35. A break of this target will move the pair further downwards to 111.65. The pivot point stands at 113.20. 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 113.65 and the second target at 114.15.
Resistance levels: 113.65, 114.15, 114.45
Support levels: 112.35, 111.65, 111.25
Origin: InstaForex
