Overview:
USD/JPY is trading with risks skewed lower. The rate is undermined by negative USD sentiment and selling of the yen crosses amid weaker risk appetite (VIX fear gauge rose 4.54% to 16.59, S&P fell 0.47% overnight) after U.S. ISM manufacturing PMI fell more than expected to contract 49.5 in November from 51.7 in October (vs. 51 forecast), while worries over U.S. fiscal cliff persist. USD/JPY is also weighed by Japan exporter sales. But risk sentiment soothed by encouraging China PMI data, diminished worries over the euro zone after Greece announced plan to reduce its outstanding debt by up to EUR10 billion; larger-than-expected 1.4% increase in U.S. October construction spending to three-year high of $872.14 billion (vs. +0.5% forecast). USD/JPY losses also tempered by demand from Japan importers; expectations that opposition Liberal Democratic Party will win mid-December elections and push for aggressive monetary easing.
Preference:
Buy above 81.9 with 82.3 and 82.45 as next targets.
Resistance Levels:
R1 - 82.3
R2 - 82.50 (Monday's high)
R3 - 82.75-82.84 (Friday's high-Nov. 22 high)
Alternative scenario:
Sell below 81.9. The downside breakout of 81.9 will open the way to 81.65 and 81.4.
Support Levels:
S1 - 81.68-81.65 (Wednesday's low-Nov. 21 low)
S2 - 81.4
S3 - 81.13-81.08 (Nov. 20 low-Nov. 19 low)
Technical Comment:
The pair is expected to bounce off a rising trendline. USD/JPY daily chart is mixed as stochastic is in bearish mode, and MACD is turning bearish; but five-day moving average is still meandering sideways.
