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"We believe the likelihood of FX intervention will be much higher if USD/JPY undercuts 105 rapidly, and the level of verbal intervention is likely to be higher."
- Nomura (based on FXStreet)
Pair's Outlook
The USD/JPY's correction has been short-lived, as the pair weakened on Friday and opened with a bearish gap on Monday. The 18-month low at 107.63 now once again is under the risk of being pierced. Although technical indicators support the negative outcome, the weekly S1, which is bolstering the 18-month low, could provide sufficient support to at least limit the dips. In case the immediate support area is breached, the Greenback should then continue falling towards the second target, namely the cluster around 106.65, represented by the monthly S3, the Bollinger band and the weekly S2.
Traders' Sentiment
Market sentiment barely changed over the weekend, as 73% of traders still hold long positions, compared to 72% on Friday. Meanwhile, the majority of all pending orders (83%) are to sell the Buck.
© Dukascopy Bank SA