Overview:
USD/JPY is trading in lower range. The rate is underpinned by yen-funded carry trades amid positive risk appetite (VIX fear gauge eased 7.06% to 12.77; S&P rose 0.78% overnight) as bigger-than-expected 5.7% increase in U.S. February durable goods orders (vs +4.0% forecast) and higher-than-expected 8.1% annual rise in U.S. January S&P/Case-Shiller's 20-city home-price index overshadowed larger-than-expected drop in U.S. consumer confidence index to 59.7 in March (vs 67.1 forecast) from final 68.0 in February; while investors felt assured about continued central-bank stimulus as March meeting of Federal Open Market Committee left monetary policy largely unchanged, and Fed Chairman Bernanke emphasized need for sustained improvement. USD/JPY is also supported by demand from Japan importers and investment trusts; expectations that new Bank of Japan governor Kuroda will enact bold easing measures at BOJ's policy meeting April 3-4 to help meet 2% inflation target-Kuroda told Parliament Tuesday that BOJ will consider extending maturities of bond purchases and scrapping the limit on such buying. But USD/JPY gains tempered by Japan exporter sales; Japanese fiscal year-end repatriation flows.
Recommendation:
Sell below 94.65 with upside targets at 93.85 and 93.45.
Support levels:
S1 - 93.87 band (Tuesday's low)
S2 - 93.53-93.45 band (Monday's low-March 18 low)
S3 - 92.99-92.92 band (March 6 low-March 5 low)
Alternative scenario:
Buy above 94.65 with upside targets at 94.99 and 95.14.
Resistance levels:
R1 - 94.97 (Monday's high)
R2 - 95.14 (Friday's high)
R3 - 96.13 (March 20 high)
