Overview:
USD/JPY is consolidating with bullish bias after hitting two-and-a-half year high of 91.82 this morning, as markets await 13:30 GMT U.S. January Non-farm payrolls (expected to increase by 166,000) and unemployment rate (expected to stay unchanged at 7.8%). Risk appetite subdued as caution sets in before U.S. jobs data, while more-than-expected 38,000 rise in latest U.S. weekly jobless claims to 368,000 (vs. 355,000 forecast) offset better-than-expected U.S. January ISM-Chicago PMI (came in at 55.6 vs. 50.0 forecast). USD/JPY is underpinned by negative yen sentiment on aggressive Bank of Japan's monetary easing policy to achieve 2% inflation target and a weaker yen; demand from Japan importers. But USD/JPY gains tempered by negative USD sentiment after Federal Reserve's statement Wednesday that it will continue easing measures; Japan exporter sales; positions adjustment before weekend. Yen crosses are vulnerable to 01:00 GMT January CFLP final China manufacturing PMI, 01:45 GMT January HSBC final China manufacturing PMI data. USD/JPY daily chart is positive-biased as MACD is bullish, stochastic stays elevated at overbought, 5- and 15-day moving averages are rising.
Data Focus:
14:55 GMT U.S. January University of Michigan survey of consumers (final).
15:00 GMT U.S. December construction spending, January ISM manufacturing PMI.
Preference:
Buy above 91.35 with 92.35 and 92.6 as next targets.
Resistance levels:
R1 - 92.35
R2 - 92.6
R3 - 92.89 (June 4, 2010 high)
Alternative scenario:
Sell below 91.25. The downside penetration of 91.25 will call for a slide towards 90.75 and 90.5.
Support levels:
S1 - 90.75-90.67 band (Thursday's low-Wednesday's low)
S2 - 90.5
S3 - 90.33-90.29 (Tuesday's low-Jan. 25 low)
Technical comment:
The pair has broken above its resistance and should post further advance as the RSI remains well directed.