Markets are cautiously staying in tight range today so far ahead of the key events this week. Though, dollar remains generally soft on reaffirmed expectation of a 50bps cut from Fed on Wed as well as further easing down the road. US durable goods orders and consumer confidence are the main feature today. Markets expect a strong rebound in headline orders by 1.9% in Dec, thanks to a substantial increase in non-defense aircraft orders. But ex-transport orders is expected to be flat only. Conference Board consumer confidence is expected to deteriorate again to 96.0 in Jan after unexpected improvement to 88.6 in Dec.

Spoke in the State of Union address, US Bush acknowledged the US economy is 'undergoing a period of uncertainty and at kitchen tables across our country, there is concern about our economic future.' But Bush also reaffirmed that the americans 'can be confident about our economic growth' in the long run, even though there are concerns about the housing slump, softer labor market and inflation. Markets paid little attention to the speech.

Released earlier, Swiss trade surplus shrank more than expected to 0.20b in Dec. Japanese unemployment rate stayed unchanged at 3.8% in Dec, suggesting that the job market is not starting to loosen up yet. Overall household expenditure climbed 2.2% y0y in Dec, following a 0.6% decline in Nov, which is much better than consensus expectation. Retail sales dropped -0.8% mom.

USD/JPY Daily Outlook

Daily Pivots: (S1) 106.24; (P) 106.63; (R1) 107.28; More.

USD/JPY continues to consolidate in tight range above 105.92 support today. Outlook remains neutral for the moment. On the one hand, with 4 hours MACD staying below sign line, it's likely that rebound from 104.96 has completed at 107.89, leaving it with a corrective three wave structure. Break of 105.92 will confirm this case and bring retest of 104.96 low. Though, firm break there is needed to confirm recent fall from 114.77 has resumed for next medium term target of 101.22/65 level. However, strong rebound above 104.96, or a break of 107.89 resistance, will indicate that correction from 104.96 is still in progress towards 110.10 resistance.

In the bigger picture, fall from 114.77 should still be in progress as long as 110.10 resistance holds. Though, below 104.96 is needed to confirm it has resumed. Otherwise, some more consolidation could still be seen in short term. Also, whole medium term down trend from 124.13 remains in force towards key medium term support zone of 101.22/65 level. However, since the structure of the fall from 124.13 is not clearly impulsive yet, the fall from 124.13 might only be part of a wide range consolidation pattern only and 101.22/65 key support might hold. Much attention will be paid there on sign of reversal as USD/JPY approaches this key support zone.

On the upside, above 110.10 will indicate that fall from 114.77 has already completed. Stronger rally could the be seen retest the trend line resistance (now at 113.41). But still, a decisive break of trend line resistance is needed to be the first signal that whole down trend fro 124.13 has completed. Otherwise, medium term outlook will remain bearish.