USD/JPY is expected to trade with a bearish bias below 114.30. The pair remains in consolidation, but is still holding above its key resistance at 114.30. The relative strength index lacks upward momentum. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
On Thursday, gains in blue chip stocks brought the Dow Jones Industrial Average to a fresh record high, while sharp losses in technology shares weighed down the Nasdaq. The DJIA advanced 68 points (+0.4%) to 19,191, while the S&P 500 declined 7 points (-0.4%) to 2,191 and the Nasdaq Composite shed 72 points (-1.4%) to 5,251.
Bank and financial shares posted gains, and energy shares were helped by oil prices’ extended rally. Semiconductor makers fell sharply on reports that Apple may be slowing orders for its latest-generation iPhone. The S&P 500 technology index lost 2.3%, Facebook dropped 2.8%, and Microsoft was down 1.8%.
Regarding major economic data, the Institute for Supply Management (ISM) posted its November Manufacturing PMI at 53.2 (vs. 52.5 expected, 51.9 in October). The Labor Department reported 268,000 initial jobless claims for the week ended November 26, higher than 253,000 expected and 251,000 for the prior week.
The selloff in U.S. government bonds showed no signs of ending. The benchmark 10-year U.S. Treasury yield jumped to a 16-month intraday high of 2.491% before settling at 2.442%, up from 2.365% Wednesday.
To sum up, as long as the key level at 114.30 is not broken, look for a further downside toward 113.25 first.
Trading Recommendation: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 113.25. A break below this target will move the pair further downwards to 112.55. The pivot point stands at 114.30. In case the price moves in the opposite direction and bounces back from the support level, it will go 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 114.80 and the second one at 115.30.
Resistance levels: 114.80, 115.30, 115.85
Support levels: 113.25, 112.55, 112.00
The material has been provided by InstaForex Company – www.instaforex.com