Overview:
USD/JPY is trading with bullish bias. The rate is underpinned by buying of yen crosses amid improved risk appetite (VIX fear gauge eased 8.78% to 16.41; S&P rose 0.48% on Friday) on signs of progress in U.S. budget negotiations toward a bipartisan solution to avoid the U.S. fiscal cliff. USD/JPY is also supported by demand from Japan importers; mounting expectations that next month's parliamentary elections in Japan will bring in LDP government that's more aggressive about weakening the yen. But USD sentiment dented by surprise 0.4% drop in U.S. industrial production last month (vs. forecast for 0.2% increase). USD/JPY upside is also limited by Japan exporter sales.
Preference:
Buy above 80.9 with targets 81.5 and 81.9.
Resistance Levels:
R1 - 81.46-81.48 (Thursday's six-and-a-half high-61.8% Fibonacci retracement of decline from March 15 high of 84.18 to Sept. 13 low of 77.13)
R2 - 81.9
R3 - 82.15
Alternative scenario:
Sell below 80.85. The downside penetration of 80.85 will call for a slide towards 80.65 and 80.3.
Support Levels:
S1 - 80.65
S2 - 80.3
S3 - 80
Technical Comment:
The pair stands above its support and remains on the upside. USD/JPY daily chart is positive-biased as MACD and stochastics are in bullish mode.
