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"While the drop in stocks and oil could be seen as a bit overdone, there's still a strong sense of risk aversion in the market. The yen is weakening now, but I don't expect it will suddenly drop back to 120 per dollar."
- Kumiko Ishikawa, Gaitame.com (based on Bloomberg)
Pair's Outlook
As it turned out, a cluster of supports at 119 was unable to keep USD/JPY afloat, allowing the pair to descend to the 23.6% Fibo at 118. The short-term outlook is therefore bearish, with the monthly PP and up-trend at 119 supposedly acting as a ceiling. If the US Dollar manages to violate 118 as well, the 55-day SMA at 117 may become the next target. Meanwhile, additional support is provided by the monthly S1 at 116.20.
Traders' Sentiment
Apparently, a yesterday's dip triggered some of the buy orders, pushing the portion of long positions from 51 to 57%. However, it did not weaken the support, on the contrary, the share of commands set to buy the US Dollar edged up from 63 to 70%.
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