FX.co ★ USD/JPY: Under pressure

Overview:
USD/JPY is trading with risks skewed lower as markets await Bank of Japan monetary policy decision: Central bank widely expected to announce a 10 trillion yen expansion of its asset-buying program and to change its inflation target from 1% to 2%. USD/JPY is undermined by profit-taking on yen-shorts; Japan exporter sales. But USD/JPY losses tempered by yen-funded carry trades amid diminished investor risk aversion as European stock markets rose Monday (DAX up 0.61%, FTSE 100 gained 0.79%) on signs of compromise on U.S. debt ceiling, while Germany's central bank delivered upbeat assessment of the country's economic outlook. USD/JPY daily chart is mixed as five- and 15-day moving averages are advancing; but bearish outside-day-range pattern was completed on Monday.
Preference:
Sell below 89.35 with targets at 88.3 and 87.8 in extension.
Support levels:
S1 - 88.3 (Thursday's low)
S2 - 87.79 (Wednesday's low)
S3 - 86.82-86.77 (Jan. 9 low-Jan. 3 low)
Alternative scenario:
Buy above 89.35. Above 89.35 look for further upside with 89.85 and 90.2 as targets.
Resistance levels:
R1 - 89.85
R2 - 90.25 (Monday's two-and-a-half year)
R3 - 90.4
Technical comment:
The RSI is capped by a bearish trendline.