FX.co ★ USD/JPY: Bullish bias

Overview:
USD/JPY is consolidating after hitting two-and-a-half year high of 94.07 on Wednesday. The rate is undermined by selling of yen crosses amid diminished investor risk appetite (U.S. stocks closed narrowly mixed overnight with S&P up 0.05%, Nasdaq down 0.1%) as markets await monetary policy announcements from the European Central Bank and Bank of England. Risk appetite is also dented by ongoing political uncertainty in Italy as former Italian PM Berlusconi narrowed a gap in recent opinion polls. USD/JPY is also weighed by profit-taking on yen-shorts; Japan exporter sales. But USD/JPY losses tempered by demand from Japan importers; aggressive Bank of Japan's monetary easing policy to combat inflation and achieve a weaker yen. Data focus: 23:50 GMT Japan December orders received for machinery, January international reserves, 05:00 GMT Japan December indexes of business conditions (preliminary), 13:30 GMT U.S. 4Q preliminary productivity & costs, 13:30 GMT U.S. weekly jobless claims, 2000 GMT U.S. December consumer credit. USD/JPY daily chart is still positive-biased as MACD is bullish, stochastic stays elevated at overbought, 5- and 15-day moving averages are rising, although spinning-top doji candlestick pattern was completed on Wednesday.
Preference:
Buy above 93 with 94 and 94.45 as next targets.
Resistance levels:
R1 - 94.07 (Wednesday's high)
R2 - 94.45
R3 - 94.99 (May 4, 2010 top)
Alternative scenario:
Sell below 93. The downside penetration of 93 will call for a slide towards 92.55 and 91.95.
Support levels:
S1 - 92.55
S2 - 91.96 (Tuesday's low)
S3 - 91.61 (Friday's low)
Technical comment:
The pair is rebounding above its strong support and should post further advance towards its previous high.