FX.co ★ USD/JPY: Further Upside

Overview:
USD/JPY is consolidating with bullish bias after surging to 20-month high of 84.48 this morning on resounding return to power by the Liberal Democratic Party in elections in Japan over the weekend. USD/JPY is underpinned by belief that LDP leader Shinzo Abe will fulfill his promises to turn on the fiscal taps, reduce the value of the yen, and pressure the Bank of Japan into much more aggressive quantitative easing to pull Japan out of recession and prolonged deflation. USD/JPY is also supported by demand from Japan importers and investment trusts. But USD/JPY gains tempered by Japan exporter sales; concern over deadlock in U.S. lawmakers' debt negotiations to avert the fiscal cliff.
Data focus:
13:30 GMT U.S. December Empire State manufacturing survey.
14:00 GMT U.S. October Treasury international capital data.
Preference:
Buy above 83.7 with 84.2 and 84.45 as next targets.
Resistance Levels:
R1 - 84.2
R2 - 84.48 (this morning's high)
R3 - 85.00
Alternative scenario:
Buy above 83.7. The downside penetration of 83.7 will call for a slide towards 83.4 and 83.2.
Support Levels:
S1 - 83.4
S2 - 83.2
S3 - 83
Technical Comment:

The pair remains on the upside and should post further advance. USD/JPY daily chart is positive-biased as MACD and stochastic are bullish, although latter is at overbought; five- & 15-day moving averages are rising.