Overview:
USD/JPY is consolidating with bearish bias after hitting one-week low of 93.53 on Monday. The rate is undermined by JPY demand on weak EUR/JPY cross as concerns rise over safety of bank deposits across the euro zone after Eurogroup head Dijsselbloem said European leaders are now committed to pushing back the risks of paying for bank bailouts from taxpayers to private investors. This marks a shift in approach in how the currency bloc deals with failing banks since the debt crisis began three years ago. USD/JPY is also weighed by unwinding of JPY-funded carry trades amid negative risk sentiment (VIX fear gauge rose 1.25% to 13.74; S&P fell 0.33% overnight); Japanese fiscal year-end repatriation flows; Japan exporter sales. But USD/JPY losses tempered by USD demand from Japan importers and life insurers; expectations of aggressive monetary easing from BOJ in coming months to achieve 2% inflation target. Daily chart is negative-biased as MACD and stochastics bearish; five-day moving average is below 15-day MA and declining.
Recommendation:
Sell below 94.5 with downside targets at 93.75 and 93.5.
Support levels:
S1 - 93.75
S2 - 93.53-93.45 band (Monday's low-March 18 low)
S3 - 92.99-92.92 band (March 6 low-March 5 low)
Alternative scenario:
Buy above 94.5 with upside targets at 94.95 and 95.21.
R1 - 94.97 (Monday's high)
R2 - 95.21 (Friday's high)
R3 - 95.35