© Dukascopy Bank SA
"That the recent drop by the dollar was contained shows that risk sentiment continues to improve. There is no change to our view that the yen will continue to weaken as the recovery in U.S. economic fundamentals, which is at the root of risk appetite, continues to gather pace."
- IG Securities (based on Reuters)
Pair's Outlook
Since the supply at 121 (weekly and monthly R1 levels) withstood USD/JPY's recent attack, the currency pair is vulnerable to a sell-off down to 118. A dip beneath this point will be highly unlikely, being that demand there is implied by the weekly pivot point, multi-month up-trend and 23.6% Fibonacci retracement of the Oct-Dec rally. On the other hand, should the rate jump over 121 in the next few days, the pair will likely aim for 124 next.
Traders' Sentiment
Just as before the Christmas, the sentiment is neutral towards USD/JPY—52% of open positions are long and 48% are short. As for the pending orders—55% are to acquire and 45% are to sell the US Dollar against the Japanese Yen.
© Dukascopy Bank SA