Overview:
USD/JPY is consolidating with bullish bias as, with some betting BOJ will increase the amount by Y15 trillion-Y20 trillion a year and start buying Japanese government bonds with maturities longer than the current limit of 3 years; seven of 10 economists surveyed said BOJ will decide to make its asset-buying program "open-ended" from this month or next, instead of waiting for next January as scheduled. USD/JPY is weighed by weaker USD sentiment after bigger-than-expected drop in U.S. ISM non-manufacturing PMI to 54.4 in March from 56 in February (vs. 55.8 forecast), and ADP reporting smaller-than-expected 158,000 increase in U.S. private-sector jobs in March (vs. +192,000 forecast). USD/JPY is also weighed by flows to safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 11.19% to 14.21, S&P fell 1.05% overnight) as weak U.S. data raised doubts about the country's economic recovery; lower U.S. Treasury yields; Japan exporter sales. But USD/JPY losses tempered by demand from Japan importers; caution ahead of Friday's U.S. non-farm payrolls report. Daily chart is negative-biased as five- and 15-day moving averages are declining; MACD is bearish, stochastics stays suppressed at oversold.
Recommendation:
Buy above 94.85 with upside targets at 96.15 and 96.4.
Resistance levels:
R1 - 96.15
R2 - 96.4
R3 - 96.65
Alternative scenario:
Sell below 94.85 with downside targets at 94.5 and 94.
Support levels:
S1 - 94.5
S2 - 94
S3 - 93.7
