Overview:
USD/JPY is consolidating as markets are waiting for 13:30 GMT U.S. 4Q advance estimate GDP (expected +1.0% vs. 3Q's +3.1%) and 19:15 GMT U.S. FOMC interest rate decision: Federal Reserve expected to maintain its aggressive bond-buying program until there are signs the economy is recovering at a stronger and broader pace. USD/JPY is undermined by weaker USD sentiment after U.S. Conference Board consumer confidence index fell more than expected to 58.6 this month (vs. 64.0 forecast) from upwardly revised 66.7 in December (first reported as 65.1). USD/JPY is also weighed by Japan exporter sales; positions adjustments ahead of U.S. GDP data and FOMC announcement. But USD/JPY losses tempered by demand from Japan importers; aggressive Bank of Japan's monetary easing policy to achieve 2% inflation target and a weaker yen; yen-funded carry trades amid improved risk sentiment (VIX fear gauge eased 1.92% to 13.31; S&P gained 0.51% overnight) on better-than-expected corporate earnings and 5.5% yearly gain in S&P/Case-Shiller 20-City home-price index for November. USD/JPY daily chart is mixed as MACD is bullish, 5- and 15-day moving averages are rising; but stochastic is turning bearish at overbought.
Preference:
Buy above 90.8 with targets at 91.55 and 91.9 in extension.
Resistance Levels:
R1 - 91.5
R2 - 91.9
R3 - 92.25
Alternative scenario:
Sell below 90.8. Below 90.8 look for further downside with 90.5 and 90.33 as targets.
Support levels:
S1 - 90.5
S2 - 90.33-90.29 (Tuesday's low-Friday's low)
S3 - 90
Technical comment:
The pair has validated a bullish flag and is breaking above its previous high.
