Overview:
USD/JPY is consolidating with bullish bias after hitting two-and-a-half year high of 94.46 overnight. Liquidity is thin in Asia as China and several other Asian countries markets shut for holiday. USD/JPY is underpinned by negative yen sentiment after U.S. Treasury said it supports Japan's efforts to boost growth and end deflation---a back-handed approval by the U.S. of Japan's push for a weaker yen. USD/JPY is also supported by aggressive Bank of Japan's monetary easing policy--prospective new BOJ Governor Haruhiko Kuroda said he is open to further easing this year, while Economic Minister Akira Amari pledged that the government would help take steps to drive the country's stock market higher by end of March; demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales. No strong cue for yen-funded trades from Wall Street overnight as U.S. stock indexes closed just below the flat line (S&P down 0.06%; DJIA off 0.16%). USD/JPY daily chart is positive-biased as MACD is still in bullish mode, stochastic stays elevated at overbought; five- and 15-day moving averages are advancing.
Preference:
Buy above 93.55 with targets at 94.45 and 94.75 in extension.
Resistance levels:
R1 - 94.45
R2 - 94.75
R3 - 94.99 (May 4, 2010, top)
Alternative scenario:
Sell below 93.55. Below 93.55 look for further downside with 93.3 and 92.9 as targets.
Support levels:
S1 - 93.3
S2 - 92.9
S3 - 92.36 (Monday's low)
Technical comment:
The pair has exceeded its previous high as the RSI has broken above a bearish trend line.
