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"The move in the dollar-yen looks a bit overdone. I don't think we're going to see a quick move up to 85"
- Mitul Kotecha, Credit Agricole (based on Bloomberg)
Pair's Outlook
A sharp rally from 79.38/23, which is mainly formed by the 55 and 200-day SMAs, proved to be unsustainable and was halted ahead of 81.79/92, resulting in an inception of a bearish correction. The U.S. Dollar could weaken until the level of 80.89/67 is reached, though we also cannot rule out a deeper retracement, back to 79.38/23, as neither 80.25 nor 79.98 promise to be reliable supports.
Traders' Sentiment
An overwhelming majority of market participants remain bullish with respect to USD/JPY, as 71% of all the positions opened are currently long, leaving only 29% to those who favour a bearish development. The ratio between buy and sell orders only reinforces positive outlook on USD/JPY, as 86% of them are to acquire the greenback.
© Dukascopy Bank SA