Overview:
USD/JPY is consolidating with bullish bias after hitting 32-month high of 92.97 on Friday. The rate is underpinned by yen-funded carry trades amid positive investor risk sentiment (VIX fear gauge eased 9.66% to 12.9; S&P surged 1.01% Friday) after U.S. January non-farm payrolls rose less-than-expected 157,000 (vs. +166,000 forecast) but initial readings for November and December non-farm payrolls were revised sharply higher, and average jobs added per month last year was revised to 181,000 from 153,000. Meanwhile, rise in U.S. January unemployment rate to 7.9% from December's 7.8% bolstered odds that the Federal Reserve will continue its quantitative easing stimulus program. Risk appetite also boosted after University of Michigan final consumer sentiment index for January came in higher than expected at 73.8 (vs. 71.5 forecast and preliminary reading of 71.3), while U.S. January ISM manufacturing PMI rose stronger than expected to 53.1 (vs. 51.0 forecast) from December's 50.2, and U.S. December construction spending increased more than expected by 0.9% (vs. +0.6% forecast). USD/JPY is also supported 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 Japan exporter sales.
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:
14:45 GMT U.S. January ISM-NY Business Index,
15:00 GMT U.S. December factory orders, January employment trends index.
Preference:
Buy above 92.3 with 93 and 93.3 in sight.
Resistance levels:
R1 - 92.97-93.00 (Friday's high-psychological level)
R2 - 93.3
R3 - 93.5
Alternative scenario:
Sell below 92.3. The downside breakout of 92.3 will open the way to 91.61 and 91.25.
Support levels:
S1 - 91.61 (Friday's low)
S2 - 91.25
S3 - 90.75-90.67 band (Thursday's low-Wednesday's low)
Technical comment:
The pair stands above its new support and remains on the upside as the RSI stands above its neutral area.
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