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"With the Swiss central bank's policy shift, the euro slid and the franc surged, creating a spike in volatility and that's led to a risk-off trade. The yen is being bought amid this risk-off mood."
- Mizuho Securities Co. (based on Bloomberg)
Pair's Outlook
USD/JPY has reached an important level that, if violated, can lead to a sharp move south. The support at 116 is a neck-line of a double top pattern, and its breach may trigger selling that is unlikely to halt until the price drops down to 113, namely the 50% retracement of the latest major up-move from 105 and the 100-day SMA. However, the technical indicators do no favour such a scenario, they are currently either bullish (weekly) or mixed (daily and monthly).
Traders' Sentiment
The bulls retain a majority in the SWFX market - 60% of open positions are long. At the same time, the percentage of commands 100 pips from the spot price to sell the buck surged from 53 up to 66%, suggesting we are approaching a significant demand zone.
© Dukascopy Bank SA