Overview:
USD/JPY is consolidating with bullish bias after hitting 29-month high of 87.35 on Wednesday. Asia’s markets are characterized by liquidity thin as markets in Japan and China are shut today for holiday. USD/JPY is supported by buying of yen crosses amid positive global risk sentiment (VIX fear gauge eased 18.53% to 14.68; S&P surged 2.54% overnight) after Congress passed bill to avoid much of the fiscal cliff, while U.S. ISM manufacturing PMI rose more than expected to 50.7 in December from 49.5 in November (vs. 50.5 forecast). USD/JPY is also buoyed by expectations that Bank of Japan will take aggressive easing action to boost the nation's economy and tackle deflation. But USD/JPY gains tempered by buy-yen orders from Japan exporters.
Data focus:
13:15 GMT U.S. December ADP national employment report
13:30 GMT U.S. weekly jobless claims
14:45 GMT U.S. December ISM-NY business index
19:00 GMT U.S. FOMC meeting minutes and economic forecast.
Preference:
Buy above 86.85 with targets 87.4 and 87.7.
Resistance
R1 - 87.35 (Wednesday's high)
R2 - 87.7
R3 - 88.11 (July 18, 2011 reaction high).
Alternative scenario:
Sell below 86.75. The downside breakout of 86.75 will open the way to 86.5 and 86.1.
Support Levels:
S1 - 86.54 (Wednesday's low)
S2 - 85.66 (Monday's low)
S3 - 85.48 (Dec. 27 low)
Technical Comment:
The pair is supported by a rising trendline and is challenging its previous high. Upward momentum remains intact as the RSI is turning up and stands above its neutral area. USD/JPY daily chart is positive-biased as MACD is bullish, stochastic stays elevated at overbought, and 5- & 15-day moving averages are rising.
