Overview:
USD/JPY is trading in higher range. The rate is underpinned by yen-funded carry trades amid positive risk sentiment (VIX fear gauge eased 11.95% to 12.67; S&P rose 0.67% overnight) after U.S. Federal Reserve reiterated its commitment to its stimulus program, buying $85 billion in bonds each month to spur economic recovery, and Bernanke said the uncertainty surrounding Cyprus is a "difficult situation" but one he didn't see as having "enormous" consequences. USD/JPY is also supported by demand from Japan importers and investment trusts; expectations of aggressive monetary easing by Bank of Japan to achieve 2% inflation target. But USD/JPY gains tempered by Japan exporter sales. Yen crosses vulnerable to 01:45 GMT March HSBC China flash manufacturing PMI data.
Recommendation:
Buy above 95.3 with upside targets at 96.28 and 96.6.
Resistance levels:
R1 - 96.28 (Friday's high)
R2 - 96.60 (March 14 high)
R3 - 96.71 (three-and-a-half year high hit March 12)
Alternative scenario:
Sell below 95.3 with downside targets at 94.83 and 94.25.
Support levels:
S1 - 94.85 (Wednesday's low)
S2 - 94.25
S3 - 93.45 (Monday's low)
Technical comments:
Daily chart is mixed as MACD is bearish, but stochastics is reverting to bullish mode near overbought.