Overview:
USD/JPY is consolidating with bullish bias after hitting near-four-year high of 98.78 this morning. The rate is underpinned by weak yen sentiment after aggressive stimulus measures from Bank of Japan Thursday; IMF's managing director Lagarde said BOJ's new aggressive easing program is a welcome step to support global growth. USD/JPY is also supported by USD demand from Japan importers, life insurers and investment trusts; geopolitical tensions on Korean Peninsula. But USD/JPY gains tempered by Japan exporter sales; lower U.S. Treasury yields, weaker risk appetite (S&P fell 0.43% Friday) and negative USD sentiment after disappointing March U.S. jobs report (non-farm payrolls only rose 88,000 vs. +200,000 forecast) which pushes back expectations for when Fed's quantitative easing will be reduced. Daily chart is positive-biased as MACD and stochastics are bullish; five-day moving average is above 15-day MA and rising.
Recommendation:
Buy above 98 with upside targets at 99.14 and 100.
Resistance levels:
R1 - 99.14
R2 - 99.72 (May 7, 2009 reaction high)
R3 - 100.00
Alternative scenario:
Sell below 98 with downside targets at 97.15 and 96.3.
Support levels:
S1 - 97.05
S2 - 96.3
S3 - 95.75 (Friday's low)
