FX.co ★ USD/JPY: Upside Prevails

Overview:
USD/JPY is consolidating with bullish bias after hitting seven-month high of 81.80 this morning on expectations of further easing from the Bank of Japan in coming months, as central bank said on Tuesday Japan's economy will "remain relatively weak for the time being," and faces political pressure to boost growth from Japan's opposition Liberal Democratic Party which is expected to win the Dec. 16 elections. USD/JPY is also supported by demand from Japan importers. But USD/JPY gains tempered by Japan exporter sales. There is no strong cue for yen-funded carry trades from Wall Street as U.S. stocks closed narrowly mixed (S&P up 0.07%, DJIA down 0.06%) as surprise 3.6% increase in U.S. October housing starts (vs. forecast for 4.5% drop) offset by Fed Chairman Bernanke's reiteration of the fiscal cliff threat and his repeating his assertion that U.S. central bank does not have the tools to offset the economic harm the cliff represents.
Preference:
Buy above 81.55 with 82.1 and 82.45 as next targets.
Resistance Levels:
R1 - 82.1
R2 - 82.45
R3 - 83
Alternative scenario:
Sell below 81.55. The downside breakout of 81.55 will open the way to 81.3 and 81.05.
Support Levels:
S1 - 81.3
S2 - 81.13-81.08 (Tuesday's low-Monday's low)
S3 - 80.89 (Friday's low)
Technical Comment:
USD/JPY daily chart is positive-biased as MACD and stochastics are bullish, although latter is at overbought; five- and 15-day moving averages are rising. The pair stands above its support and remains on the upside.