Overview:
USD/JPY is consolidating with risks skewed lower after hitting 20-month high of 84.62 on Wednesday, as markets await Bank of Japan's monetary policy meeting decision- JPY would rally if BOJ does not boost its asset purchases or give lip service to Prime Minister-elect Shinzo Abe's idea of increasing its inflation target to 2%. USD/JPY is undermined by selling of yen crosses amid increased risk aversion (VIX fear gauge rose 11.62% to 17.38, S&P fell 0.76% overnight) as latest news from Washington suggested a setback in budget negotiations--White House said President Obama would veto a tax and spending plan proposed by House Speaker John Boehner, leading Mr. Boehner to warn of the "biggest tax increase in history." USD/JPY is also weighed by Japan exporter sales. But USD/JPY losses tempered by demand from Japan importers.
Other data:
13:30 GMT U.S. weekly jobless claims, U.S. 3Q GDP (third estimate),
15:00 GMT U.S. October monthly house price index, November existing home sales, November leading indicators, U.S. December Philadelphia Fed business outlook survey.
Preference:
Buy above 83.9 with targets 84.2 and 84.55.
Resistance Levels:
R1 - 84.2
R2 - 84.55
R3 - 84.7
Alternative scenario:
Sell below 83.9. The downside penetration of 83.9 will call for 83.6 and 83.3.
Support Levels:
S1 - 83.61 (Monday's low)
S2 - 83.32 (Friday's low)
S3 - 83.13 (Dec. 13 low)
Technical Comment:
The pair is challenging a bullish channel lower boundary. USD/JPY daily chart is still positive-biased as MACD is bullish, stochastic stays elevated at overbought, and 5- & 15-day moving averages are rising.
