Overview:
USD/JPY is to consolidate with bullish bias after hitting 27-month high of 85.73 Wednesday underpinned by negative JPY sentiment on expectations that Japan's new prime minister Abe and his Cabinet will take aggressive steps to tackle deflation and rein in yen's strength. USD/JPY also supported by demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales, and weak risk appetite (S&P fell 0.48% overnight; VIX fear gauge rose 8.18% to 19.3) on lackluster U.S. holiday-sales reports and pessimism that the U.S. can avert the approaching fiscal cliff of automatic spending cuts and tax increases due to kick in next year, the White House said President Obama planed to cut short his vacation in Hawaii and return to Washington, but many lawmakers aren't even in the capital to negotiate a deal.
Data focus:
05.00 GMT Japan November construction orders & housing starts,
13.30 GMT U.S. weekly jobless claims, November Chicago Fed Midwest manufacturing index,
15.00 GMT U.S. November new home sales, U.S. December consumer confidence index.
Preference:
Buy above 85.3 with 86 and 86.3 as next targets.
Resistance Levels:
R1 - 86
R2 - 86.3
R3 - 86.5
Alternative scenario:
Sell below 85.3. The downside penetration of 85.3 will call for 85 and 84.75.
Support Levels:
S1 - 85
S2 - 84.73 (Wednesday's low)
S3 - 84.60 (Tuesday's low)
Technical Comment:
The pair has broken above its previous high and should post further advance. USD/JPY daily chart is positive-biased as MACD bullish, stochastics stays elevated at overbought, 5- & 15-day moving averages are rising.
