FxWirePro: USD/JPY retakes 113 handle, finds stiff resistance at 113.87 (5-DMA)

Fundamental Factors:

• Data released earlier today showed Japan’s January Nikkei manufacturing PMI decreased to 52.7 vs previous 52.8.
• Bank of Japan on Tuesday kept policy unchanged in line with forecasts and extended debt buying for its loan programme by 1 year.
• Markets reacted negatively to the sanguine economic outlook and a downward revision of the long-run inflation forecasts.
• Major data lined up for this week include - US core PCE price index data, followed by the FOMC decision, China manufacturing PMI and US payrolls.

Technical Studies:

• Near-term trend in the pair remains bearish. Weekly charts are bearish.
• Price action has broken below 100-DMA and Stochs are showing a rollover from overbought zone.
• On the daily charts 5-DMA caps upside, break above could see test of 20-DMA at 114.43.
• Bearish invalidation only on decisive close above 20-DMA.
• The pair has broken below 50-DMA and we see scope for test of 111 levels (38.2% Fib).
• Violation at 38.2% Fib could see test of 100-DMA currently at 109.63.

Support levels - 111.35 (Nov 28 low), 111.07 (38.2% Fib), 109.63 (100-DMA)

Resistance levels - 113.97 (23.6% Fib), 114.02 (5-DMA), 114.66 (20-DMA)

TIME  TREND INDEX  OB/OS INDEX    

1H          Neutral              Neutral       
4H          Neutral              Neutral       
1D          Bearish              Neutral        
1W         Bearish              Rollover from o/b  

Call update: Our previous call (http://www.econotimes.com/FxWirePro-USD-JPY-struggles-at-50-DMA-amid-wide-spread-risk-off-BOJ-in-focus-511754) has achieved all targets.

Recommendation: Bias lower, book partial profits. Lower trailing stops to 114. Hold for 111.35/ 111.

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -75.3484(Bearish), while Hourly JPY Spot Index was at 68.5323 (Bullish) at 0515 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.