FX.co ★ USD/JPY Intraday: The Downside Prevails

Overview:
USD/JPY has consolidated in lower ranges as Japan posted a merchandise trade deficit of Y315.04 billion in the first 10 days of October, from a Y112.00 billion surplus in the year-earlier period, the finance ministry said on Tuesday. The figures are measured on the basis of goods passing customs and are reported before adjustment for seasonal factors.
Exports Y1.519 tln -4.8% Y1.596 tln
Imports Y1.834 tln +23.6% Y1.484 tln
Central bank expected to expand the size of its Y80 trillion asset-purchase program by Y10 trillion. The USD/JPY pair is undermined by selling of yen crosses amid subdued risk appetite with Wall Street shut overnight as Hurricane Sandy bears down on U.S. East Coast; U.S. financial markets will remain closed on Tuesday. Japan's industrial output fell a surprisingly steep 4.1% on month in September, as a slowdown in key markets, particularly in China, prompts the government to downgrade its outlook for the sector, saying it is on a "downward trend." The drop compares with expectations for a 3.1% decline. The gloomy picture is expected to continue in the immediate future, with companies surveyed as part of the report saying they see a further fall of 1.5% in October, although they then eye a rebound of 1.6% for November. USD/JPY is also weighed by Japan exporter sales; concerns about U.S. "fiscal cliff" in early 2013 that could throw the U.S. economy back into recession; uncertainty over outcome of Obama-Romney U.S. presidential election next Tuesday; persistent worries over the euro-zone debt crisis. But USD/JPY losses tempered by demand from Japan importers; improved USD sentiment on higher-than-expected 0.8% rise in U.S. September personal spending (vs. +0.6% forecast). U.S. Conference Board announced overnight it would delay the release of its October consumer confidence reading originally scheduled for Tuesday until Thursday.
Preference:
Sell below 79.75 with 79.15 and 78.95 as next targets.
Support Levels:
S1 - 79.14 band (Oct. 19 low)
S2 - 78.91 (Oct. 18 low)
S3 - 78.61 (Oct. 17 low)
Alternative scenario:
Buy above 79.75, upside penetration of 79.75 will call for a rebound towards 79.95 and 80.1.
Resistance Levels:
R1 - 79.85 (Monday's high)
R2 - 80.1
R3 - 80.38 (Friday's four-month high)
Technical Comment:
The pair has broken below its support and remains on the downside. Stochastics is bearish at overbought.