Overview:
USD/JPY is trading in higher range. Liquidity thin later in global day as U.S. markets shut for holiday. USD/JPY is supported after G-20 pledged not to target exchange rates to gain a competitive trading advantage, avoiding a direct rebuke of Japan's recent efforts to jumpstart its economy and clearing the way for Bank of Japan to continue expanding its bond-buying program; comment from IMF head Lagarde that yen's drop has been welcomed. USD/JPY is also supported by demand from Japan importers and investment trusts; positive USD sentiment after Empire State's business conditions index swung to plus 10.04 in February (vs. minus 3.0 forecast) from minus 7.78 in January, University of Michigan preliminary consumer sentiment index increased more than expected to 76.3 in February (vs. 75.0 forecast) from January's final 73.8. But USD/JPY gains tempered by Japan exporter sales. No strong cue for yen-funded carry trades from Wall Street Friday as U.S. stocks closed narrowly mixed (DJIA up 0.06%, S&P down 0.1%). USD/JPY daily chart is mixed as MACD is in bearish mode, but stochastics is turning bullish; bullish outside-day-range pattern was completed on Friday; five-day moving average is meandering sideways above rising 15-day MA.
Preference:
Buy above 93.25 with targets at 94.45 and 95 in extension.
Resistance levels:
R1 - 94.41-94.46 (Tuesday's high-Feb. 11 two-and-a-half year high)
R2 - 94.99 (May 4, 2010 top)
R3 - 95.35
Alternative scenario:
Sell below 93.25. Below 93.25 look for further downside with 92.75 and 92.15 as targets.
Support levels:
S1 - 92.75
S2 - 92.22-92.17 (Friday's low-Feb. 8 low)
S3 - 91.61 (Feb. 1 low)
Technical comment:
The RSI is bullish and calls for further upside.