FX.co ★ USD/JPY: Under Pressure

Overview:
USD/JPY is trading with risks skewed higher. The rate is underpinned by positive USD sentiment after U.S. November non-farm payrolls rose more-than-expected 146,000 (vs. +80,000 forecast) and unemployment rate dropped to 7.7% from October's 7.9% (vs. forecast for no change); signs of progress in U.S. budget talks after senior Republican senator Bob Corker said a growing number of Republicans realize they can get the upper hand in budget negotiations with Democrats if they agree to raise tax rates on the wealthiest Americans. USD/JPY is also supported by yen-funded carry trades amid positive risk appetite (VIX fear gauge eased 4.1% to 15.9; S&P gained 0.29% Friday) on upbeat U.S. jobs data, signs of growing momentum in China's economic recovery after China November retail sales rose 14.9%, accelerating from 14.5% increase in October, while China November industrial output came in stronger than expected at +10.1% (vs. +9.8% forecast); demand from Japan importers and investment trusts; expectations that opposition Liberal Democratic Party would win a parliamentary majority in Dec. 16 elections and push for aggressive monetary easing. But risk sentiment dented Friday after preliminary University of Michigan's consumer-sentiment index for December fell much more than expected to 74.5 (vs. 82.0 forecast) from end-November's 82.7. The rate USD/JPY gains also tempered by Japan exporter sales. Yen crosses are vulnerable to China November trade balance data.
Preference:
Sell below 82.45 with targets 82 and 81.85 in extension.
Support levels:
S1 - 82
S2 - 81.71-81.68 (Tuesday's low-Nov. 28 low)
S3 - 81.13-81.08 (Nov. 20 low-Nov. 19 low)
Alternative scenario:
Buy above 82.45. Above 82.45 look for further upside with 82.6 and 82.85 as targets.
Resistance Levels:
R1 - 82.6
R2 - 82.83-82.84 (Friday's high-Nov. 22 high)
R3 - 83.00
Technical Comment:
The RSI is mixed to bearish. USD/JPY daily chart is mixed as MACD is bearish; but stochastic is reverting to bullish mode near overbought; five-day moving average is meandering sideways.