Overview:
USD/JPY continues to range trade. The rate is undermined by capital flows to safe-haven JPY amid negative risk sentiment as U.S. stocks fell to more than three-month lows overnight (S&P down 0.32%) on persistent worries over U.S. budget debate, lingering concerns over Greece as the International Monetary Fund and European Commission publicly disagree on how Greece's debt should be tackled, and heightened fears of slowdown in euro-zone's core economies after weak German economic sentiment data. USD/JPY is also weighed by lower U.S. Treasury yields; Japan exporter sales. But USD sentiment boosted by rise in U.S. NFIB index of small business optimism to 93.1 in October from 92.8 in September. USD/JPY losses also tempered by demand from Japan importers.
Preference:
Buy above 79.55 with targets 79.95 and 80.1 in extension.
Resistance Levels:
R1 - 79.95
R2 - 80.1
R3 - 80.41-80.45 (Nov. 7 high-Nov. 6 high)
Alternative scenario:
Sell below 79.55. Below 79.55 look for further downside with 79.3 & 79.15 as targets.
Support Levels:
S1 - 79.3
S2 - 79.15
S3 - 78.83 (confluence of 100-day and 55-day moving averages)
Technical Comment:
The pair has broken above its resistance and remains on the upside. USD/JPY daily chart is still negative-biased as MACD & stochastics are bearish; five-day moving average is below 15-day MA and falling.
