Overview:
USD/JPY is in range-trade. Liquidity thin is observed as markets in several countries shut today for Good Friday holiday. USD/JPY is underpinned by yen-funded carry trades amid positive risk sentiment (VIX fear gauge eased 3.42% to 12.7; S&P and DJIA both set record highs overnight, closed up 0.41% and 0.36% respectively) as investors continued to feel assured of prolonged stimulus measures from Federal Reserve after disappointing U.S. data: Third reading of U.S. 4Q GDP came in at +0.4%, below forecast of +0.5%; latest U.S. weekly jobless claims rose higher-than-expected 16,000 to 357,000 (vs. 340,000 forecast); U.S. Chicago PMI fell to 52.4 in March from 56.8 in February. Risk appetite also helped by relatively calm reopening of Cypriot banks Thursday, three days after the troubled nation secured a EUR10 billion bailout from international creditors. USD/JPY is also supported by demand from Japan importers and investment trusts; expectations that Bank of Japan will implement aggressive easing measures at its April 3-4 policy meeting to help meet 2% inflation target, including purchases of longer-dated Japanese government bonds and an expansion of the BOJ's asset purchases. But USD/JPY upside is limited by Japan exporter sales; positions adjustment before weekend. Daily chart is still negative-biased as MACD and stochastics bearish; five-day moving average is below 15-day MA and declining.
Recommendation:
Sell below 94.5 with downside targets at 93.85 and 93.53.
Support levels:
93.88-93.87 (Thursday's low-Tuesday's low)
93.53-93.45 band (Monday's low-March 18 low)
92.99-92.92 band (March 6 low-March 5 low, near 55-day moving average).
Alternative scenario:
Buy above 94.5.
Resistance levels:
R1 - 94.91-94.97 band (Wednesday's high-Monday's high)
R2 - 95.14 (March 22 high)
R3 - 95.35
