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"The outlining of additional Fed stimulus options could work to the [dollar's] benefit, given currently heightened levels of investor risk aversion surround Europe"
- Credit Agricole (based on MarketWatch)
Pair's Outlook
USD/JPY is slowly drifting lower and will soon bump into a support area at 78.92/85, which might trigger temporary short-squeezing, but is not viewed as able to reverse persisting downward tendency of the currency couple. Rallies will be capped by strong resistance at 79.35/43 and therefore should be shallow. Additional supports, however, lie at 78.52 and at 78.08/77.97.
Traders' Sentiment
The currency pair is overbought to a substantial extent, since stance of more than two thirds (70%) of the market is bullish, leaving only 30% of the market to traders, who expect the Japanese Yen to continue appreciating relative to the U.S. Dollar. As for the orders placed on USD/JPY, the largest portion of them (68%) is buy orders and sell orders are in minority (32%)
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