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"Expectations for drastic reflationary policies in Japan have driven yen weakness. Optimism that U.S. fundamentals are improving is accelerating yen selling and dollar buying"
- Mitsubishi UFJ (based on Bloomberg)
Pair's Outlook
A breathing-space was very short in USD/JPY, as the pair continues to surge and even exhibits a fast pace of appreciation. The situation is largely unchanged and most indicators suggest a heavily oversold context. Even in a weekly graph the price has exceeded the upper Bollinger line by 130 pips and the RSI is at 80. In a such situation the most critical resistance levels are 89.18, where a 30-month high merges with a historical level and, slightly higher, 91.00—423.6% Fibo level from a down-side wave since the end of October, 2011.
Traders' Sentiment
SWFX market investors estimate worse prospects for the Japanese Yen than for the U.S. Dollar. The majority of traders, 77%, have opened buy positions and only 23% have sell positions. Pending orders segment shows a huge support for an up-side movement, as 82% orders are buy and 18% are sell.
© Dukascopy Bank SA