USD/JPY is going to consolidate with bearish bias after hitting 4-day low of 78.08 Monday. The rate is undermined by flows to safe-haven JPY and unwinds of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 5.44% to 15.11, S&P fell 0.35% overnight) as worries are increasing over global economic health after World Bank has cut its growth projections for East Asia and warned that slowing activity in China could be sharper and can last longer than market expectations. The IMF cut the growth forecast for the world economy and warned that  "risks for a serious global slowdown are alarmingly high." The market also affected by weak forecasts for U.S. 3Q earnings as reporting season kicks off Tuesday. Moreover, the persistent worries over debt-laden Europe are still valid. USD/JPY is also weighed by Japan exporter sales. But USD/JPY losses tempered by demand from Japan importers.

Data focus:

23:50 GMT Japan September international transactions in securities, August balance of payments, 2Q revised balance of payments,

05:00 GMT Japan September economy watchers survey, October BOJ monthly report,

11:30 GMT U.S. September NFIB Index of Small Business Optimism,

14:00 GMT U.S. September employment trends index,

14:00 GMT U.S. October IBD/TIPP Economic Optimism Index.    

Preference:  
Short positions below 78.45 with targets at 78.05 and 77.80 in extension.
Support Levels :
78.08 (Monday's low)
77.79 (Oct. 1 low)
77.43 (Sept. 28 low)
77.13 (Sept. 13 low).  
Alternative scenario:
Above 78.45 look for further upside with 78.65 and 78.85 as targets.
Resistance Levels:
78.65 *** intraday Resistance
78.88 (Friday's high)
79.23-79.33(Sept. 19 high-200-day moving average)
79.66 (Aug. 20 reaction high).    
Comment:  
the upward potential is likely to be limited by the resistance at 78.45.  

Ahsan Aslam  
Official Analyst of InstaForex Companies Group
InstaForex Companies Group
http://instaforex.com 
Email : [email protected]