Overview:
USD/JPY--to trade with bullish bias after hitting two-and-a-half year high of 94.77 this morning. Underpinned by news Japan PM Abe is preparing to name ADB's Kuroda--Japan's former top currency official and advocate of more easing measures by the Bank of Japn--as central bank governor. USD/JPY also supported JPY-funded carry trades amid increased risk appetite (VIX fear gauge eased 6.9% to 14.17; S&P rose 0.88% Friday) on upbeat U.S. corporate earnings, better-than-expected German business confidence data; demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales. Yen crosses vulnerable to 0145 GMT February HSBC China flash manufacturing PMI data. USD/JPY daily chart positive-biased after spot violated resistance at Feb. 11 high of 94.46; stochastics turning bullish.
Preference:
Buy above 93.5 with targets at 94.45 and 95 in extension.
Resistance Levels:
R1 - 94.45
R2 - 94.99 (May 4, 2010 top)
R3 - 95.25
Alternative scenario:
Sell below 93.5. Below 93.5 look for further downside with 93 & 92.75 as targets.
Support Levels:
S1 - 93
S2 - 92.77 (Thursday's low)
S3 - 92.22-92.17 (Feb. 15 low-Feb. 8 low)
Technical Comment:
The pair has broken above its resistance and should post further advance towards its previous high, the RSI is well directed.