Overview:
USD/JPY is consolidating with bullish bias after hitting two-and-a-half year high of 90.56 overnight as predicted yesterday. The rate is underpinned by weak yen sentiment after Japan's trade deficit nearly tripled to record JPY6.927 trillion last year from 2011 as Deputy Economy Minister Nishimura told Bloomberg a drop to 100 yen per dollar wouldn't pose a problem. USD/JPY is also supported by demand from Japan importers and investment trusts and improved USD sentiment after latest U.S. weekly jobless claims fell more than expected to five-year low of 330,000 (vs. 360,000 forecast); Markit U.S. manufacturing PMI rose to 56.1 in January, its highest since March 2011, from 54.0 in December. But USD/JPY gains tempered by Japan exporter sales; positions adjustment before weekend. USD/JPY daily chart turned positive-biased after spot broke resistance at Monday's high of 90.25; bullish parabolic stop-and-reverse signal hit at 90.21 on Thursday; five- and 15-day moving averages are rising.
Data focus:
15:00 GMT U.S. December new home sales.
Preference:
Buy above 89.9 with targets at 91 and 91.2 in extension.
R1 - 91
R2 - 91.2
R3 - 91.45
Alternative scenario:
Sell below 89.9. Below 89.9 look for further downside with 89.6 and 89.25 as targets.
Support levels:
S1 - 89.6
S2 - 89.25
S3 - 89
Technical comment:
The RSI is bullish and calls for further advance.
