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"The drop in oil price is currently see as a factor spurring risk aversion. There's a low probability of risk appetite returning completely unless oil prices see a clear floor. As the risk aversion phase deepens, pressure is rising for the yen to strengthen."
- IG Markets Securities Ltd. (based on Bloomberg)
Pair's Outlook
Without the fundamentals to drive the pair, USD/JPY stayed unchanged just above 118. Nonetheless, the bias is to the upside, as the Dollar is unlikely to violate the critical supports. The nearest major demand area is represented by the 23.6% retracement of the most recent rally and by the 55-day SMA, followed by the 38.2% retracement at 115.50. However, in order to confirm its long-term bullish intentions, the buck must close above 122.
Traders' Sentiment
While the US Dollar remained inactive, more people bought the currency than sold it, resulting in a skew towards the long positions that now constitute 57% of the market. Simultaneously, the percentage of buy orders plunged from 60 to 51%.
© Dukascopy Bank SA