Overview:
USD/JPY is consolidating with bullish bias after hitting eight-and-a-half-month high of 83.30 on Wednesday. The rate is underpinned by buying of yen crosses after U.S. Federal Reserve as widely anticipated announced it would add $45 billion in Treasury-note purchases to its $40 billion-a-month purchases of mortgage-backed bonds, although it unexpectedly set targets on unemployment and inflation-said it would keep official rates near zero so long as the jobless rate remains above 6.5% and inflation isn't forecast to rise above 2.5%. USD/JPY is also supported by expectations opposition Liberal Democratic Party would win Sunday's parliamentary elections and push for aggressive monetary easing; demand from Japan importers and investment trusts. But risk appetite dented (VIX fear gauge rose 2.31% to 15.93; U.S. stocks closed narrow mixed overnight with DJIA down 0.02%, S&P up 0.04%) after Fed Chairman Bernanke warned the central bank does not have the ability to shield the economy from the U.S. fiscal cliff. USD/JPY gains also tempered by Japan exporter sales.
Preference:
Buy above 83.1 with targets 83.65 and 83.9 in extension.
Resistance Levels:
R1 - 83.65
R2 - 83.9
R3 - 84.17 (March 15 top).
Alternative scenario:
Sell below 83.1. Below 83.1 look for further downside with 82.9 and 82.75 as targets.
Support Levels:
S1 - 82.9
S2 - 82.75
S3 - 82.49 (Wednesday's low)
Technical Comment:
The pair is rebounding on its support and is approaching its previous high. USD/JPY daily chart turned positive-biased after spot broke above Nov. 22 high of 82.84; MACD and stochastic turned bullish; five-day moving average is above 15-day MA and rising.
