Overview:
USD/JPY continues to range-trade after Bank of Japan on Thursday increased size of its asset-purchasing program by Y10 trillion to Y101 trillion, and promised to review its inflation goal at its next meeting in January as it faces pressure from Prime Minister-elect Shinzo Abe to adopt a higher inflation target. USD/JPY underpinned by buying of yen crosses amid improved risk appetite (S&P rose 0.55% overnight) after higher-than-expected revision to U.S. 3Q GDP to 3.1% (vs. 2.8% forecast) from previous estimate of 2.7%, U.S. November existing home sales rose more-than-expected 5.9% from October (vs. +2.3% forecast), Philadelphia Fed's December index of business activity surged to plus 8.1 from November's minus 10.7 (vs. minus 2.1 forecast). USD/JPY is also supported by demand from Japan importers and investment trusts. USD/JPY gains limited by worries that Washington lawmakers may not be able to reach a deal to avert a severe drop-off in federal spending and expiring tax breaks taking effect at the end of the year; Japan exporter sales; positions adjustment ahead of Japan's long weekend (Japan markets shut for holiday on Monday).
Data focus:
13:30 GMT U.S. November personal income and spending, November durable goods orders, November Chicago Fed national activity index.
14:55 GMT U.S. December University of Michigan survey of consumers (final). 16:00 GMT U.S. December Kansas City Fed's manufacturing activity index.
Preference:
Buy above 83.85 with targets 84.45 and 84.6 in extension.
Resistance Levels:
R1 - 84.45 (Thursday's high)
R2 - 84.62 (Wednesday's 20-month high)
R3 - 85.00
Alternative scenario:
Sell below 83.85. Below 83.85 look for further downside with 83.6 and 83.3 as targets.
Support Levels:
S1 - 83.61 (Monday's low)
S2 - 83.32 (Dec. 14 low)
S3 - 83.13 (Dec. 13 low)
Technical Comment:
The pair stands above its support and is challenging its intermediary resistance. USD/JPY daily chart is still positive-biased as MACD is bullish, stochastic stays elevated at overbought, 5- & 15-day moving averages are rising.
