Overview:
USD/JPY has consolidated with bullish bias after hitting near-30-month high of 89.04 this morning. The rate is underpinned by yen-funded carry trades amid positive global risk sentiment (VIX fear gauge eased 2.32% to 13.49 and S&P rose 0.75% to end at five-year closing high overnight) as strong China December trade data raised the optimism about health of global economy. Risk appetite also boosted after latest U.S. continuing jobless benefit claims dropped by 127,000 to 3,109,000, the lowest level since July 2008. USD/JPY is also supported by expectations of aggressive stimulus measures from Bank of Japan and the Japanese government; demand from Japan importers. But USD/JPY gains tempered by Japan exporter sales and positions adjustment before weekend. Yen crosses are vulnerable to 01:30 GMT China December CPI, PPI data. USD/JPY daily chart is positive-biased as MACD bullish and stochastic stays elevated at overbought, five- and 15-day moving averages are rising.
Other data:
13:30 GMT U.S. December import and export price indexes
13:30 GMT U.S. November trade balance, 14:30 GMT Fed's Plosser speaks.
Preference:
Buy above 88.2 with targets at 89.35 and 89.5.
Resistance Levels:
R1 - 89.35
R2 - 89.5
R3 - 89.75
Alternative scenario:
Sell below 88.2.The downside breakout of 88.2 will open the way to 87.9 and 87.7.
Support Levels:
S1 - 87.86 (Thursday's low)
S2 - 87.7
S3 - 87.5
Technical Comment:
The pair has broken above its previous high and remains on the upside, the RSI stands above its neutral area and remains well directed.
