Overview:
USD/JPY is consolidating in lower range after hitting three-and-a-half year high of 96.71 on Tuesday. The rate is undermined by unwinding of JPY-funded carry trades amid decreased risk appetite (VIX fear gauge rose 6.14% to 12.27, S&P fell 0.24% overnight); profit-taking on USD-longs after extended dollar advance; Japan exporter sales. But USD/JPY losses tempered by Bank of Japan's aggressive monetary easing stance to achieve 2% inflation target--speculation grew that BOJ might take earlier-than-expected easing action after Japanese media reported an unscheduled central bank policy meeting could take place soon after new leadership assumes office March 20; demand from Japan importers and investment trusts. Daily chart is mixed as MACD is bullish, 5- and 15-day moving averages are rising; but stochastics is turning bearish at overbought; bearish outside-day-range pattern was completed on Tuesday.
Recommendation:
Sell below 96.3 with downside in sight with first target at 95.55 and second target at 95.
Support levels:
S1 - 95.55 (Tuesday's low)
S2 - 95
S3 - 94.79 (Friday's low)
Alternative scenario:
Buy above the pivot point of 96.3 and look for upside targets at 96.71 and 97.02.
Resistance levels:
R1 - 96.71 (Tuesday's high)
R2 - 97.02
R3 - 97.15
