Overview:
USD/JPY is trading in a higher range. The rate is underpinned by positive USD sentiment after bigger-than-expected 1.1% on-month rise in U.S. February retail sales (vs. +0.7% forecast) and 1.0% increase in U.S. January business inventories (vs. +0.5% forecast). USD/JPY is also supported by demand from Japan importers and investment trusts; JPY-funded carry trades amid improved risk appetite (VIX fear gauge eased 3.59% to 11.83, S&P rose 0.13% overnight) as strong U.S. retail sales data cemented picture of U.S. economic recovery gaining traction; Bank of Japan's aggressive monetary easing stance to achieve 2% inflation target; speculation that unscheduled BOJ meeting would be held soon after governor nominee Haruhiko Kuroda takes over the post. But USD/JPY gains tempered by Japan exporter sales. Data focus: 04:30 GMT Japan January revised industrial production and revised retail sales, 06:00 GMT Japan February revised machine tool orders, 12:30 GMT U.S. February PPI, March 9 weekly jobless claims.
Recommendation:
Buy above the pivot point 95.9 with first target at 96.7 and second target at 97.02.
Resistance levels:
R1 - 96.71 (Tuesday's three-and-a-half year high)
R2 - 97.02
R3 - 97.25
Alternative scenario:
Sell below the pivot point 95.9 and look for downside targets at 95.6 and 95.44.
Support levels:
S1 - 95.6
S2 - 95.25
S3 - 94.79 (Friday's low)
Technical comment:
Daily chart is positive-biased as MACD is bullish, while stochastics stays elevated at overbought; five-day moving average is above 15-day MA and rising.
