Overview:
The USD/JPY is to range-trade. Underpinned by broadly stronger demand for USD after US FOMC meeting minutes indicated the Federal Reserve might consider making changes in its ultra-loose monetary policy. The USD/JPY is also supported by aggressive Bank of Japan monetary easing stance, demand from Japan importers and investment trusts. But the USD/JPY upside is limited by Japan export sales, flows to safe-haven JPY and unwinding of JPY-funded trades amid increased risk aversion (VIX fear gauge jumped 19.25% to 14.68; S&P tumbled 1.24% overnight) as the US central bank showed rising unease about its recent stimulus efforts. The USD/JPY daily chart mixed as MACD&Stochastics are in bearish mode, but five-day moving average is meandering sideways above rising 15-day MA.
Preference:
Short positions below 93.85 with targets at 92.75 and 92.2 in extension.
Support levels:
S1 - 92.75
S2 - 92.22-92.17 (Friday's low-Feb. 8 low)
S3 - 91.96 (Feb. 5 low)
Alternative scenario:
Buy above 93.85. Above 93.85, 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 RSI is capped by a bearish trend line.
