OvervieW: USD/JPY is trading with bearish bias as U.S. partial government shutdown drags on for the seventh day. USD/JPY is undermined by weaker dollar sentiment after no agreement to end the shutdown was seen over the weekend (U.S. stocks had risen Friday - S&P gained 0.71% - as some investors were optimistic that Washington may see progress over the weekend), while House Speaker Boehner said he won't pass a bill to increase the U.S. debt ceiling without addressing longer-term spending and budget challenges. A failure by Congress to raise the cap by Oct. 17 would trigger a U.S. default on its debt. USD/JPY also weighed by reduced expectations that the Fed would start to taper its $85 billion-a-month bond-buying program this year; Japan exporter sales; selling of yen crosses amid diminished risk appetite. But USD/JPY losses are tempered by demand from Japan importers. Data focus: 2350 GMT Japan September international reserves; 0500 GMT Japan August preliminary indexes of business conditions, October Bank of Japan monthly report; 1900 GMT U.S. August consumer credit (expected to rise another $13.5 billion). Daily chart is negative-biased as MACD is bearish, stochastics stays suppressed at oversold; 5- and 15-day moving averages are declining. Trading recommendation: The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. A short position is recommended with the first target at 96.6 in view; a breach of this target will move the pair further downwards to 96.35. The pivot point stands at 97.5. In case the price moves in the opposite direction, bounces back from support, and moves above its pivot point, then the price is most favorably expected to move further to the upside, In that scenario a long position is recommended with the first target at 98.10 and the second target at 98.35. Support levels: 96.8 96.35 96 Resistance levels: 98.1 98.35 98.7
