Overview:
USD/JPY is trading in lower range. JPY sentiment is stronger after Finance Minister Aso Tuesday played down earlier comments by Prime Minister Abe that the government could ask Bank of Japan to purchase foreign bonds as part of its monetary policy. USD/JPY is also weighed by Japan exporter sales; weaker USD sentiment on surprise drop in U.S. NAHB housing market index to 46 in February from 47 in January (vs. forecast for rise to 48), worries of no serious proposals from U.S. lawmakers to avoid the $1.2 trillion automatic spending cuts set to kick in March 1. But USD/JPY losses tempered by demand from Japan importers; yen-funded carry trades as risk appetite improves after stronger-than-expected German economic sentiment data. USD/JPY daily chart is mixed as MACD is in bearish mode, but stochastics is bullish; five-day moving average is meandering sideways above rising 15-day MA.
Preference:
Short positions below 93.8 with targets at 93.1 and 92.75 in extension.
Support levels:
S1 - 93.1
S2 - 92.75
S3 - 92.5
Alternative scenario:
Buy above 93.8. Above 93.8 look for further upside with 94.2 and 94.45 as targets.
Resistance levels:
R1 - 94.22 (Monday's high)
R2 - 94.41-94.46 (Feb. 12 high-Feb. 11 two-and-a-half year high)
R3 - 94.99 (May 4, 2010, top)
Technical comment:
The pair remains in an intraday bearish channel.
