Overview:
USD/JPY is to consolidate with bullish bias after hitting 29-month high of 88.48 Friday underpinned by buying of the yen crosses amid improved risk appetite (VIX fear gauge eased 5.01% to 13.83; S&P rose 0.49% Friday) after the U.S. nonfarm payrolls rose 155,000 in December, close to +160,000 forecast, and U.S. ISM's nonmanufacturing PMI unexpectedly rose to 56.1 in December from 54.7 in November (vs forecast for drop to 54.0). The USD/JPY is also supported by demand from Japan importers and investment trusts, and expectations that Bank of Japan will take aggressive easing action to boost the economy and tackle deflation. But USD/JPY gains tempered by Japan exporter sales, weaker USD sentiment as the U.S. unemployment rate was unchanged from November's upwardly revised 7.8% (vs 7.7% forecast), easing fears that Federal Reserve's quantitative easing program might end earlier than expected this year. USD/JPY daily chart is positive-biased as MACD bullish, stochastics remains elevated at overbought, 5- & 15-day moving averages rising.
Preference:
Buy above 87.55 with 88.35 and 88.6 as next targets.
Resistance Levels:
R1 - 88.48 (Friday's high)
R2 - 88.6
R3 - 88.8
Alternative scenario:
Sell below 87.55.The downside penetration of 87.55 will call for a slide towards 87.35 & 87.1.
Support Levels:
S1 - 87.35
S2 - 87.1
S3 - 86.77 (Thursday's low)
Technical Comment:
The pair has struck against its previous intraday high and faces a pull back at its new support, the RSI is on the downside approaching its oversold area.
