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"While the Fed is unlikely to do QE3 at this point, it's possible they will come up with other forms of stimulus. New stimulus measures could send U.S. interest rates lower and dollar-yen may decline on back of that"
- Markets Securities Ltd. (based on Bloomberg)
Pair's Outlook
USD/JPY has confronted 78.08/06, but did not manage to overcome it, resulting in commencement of recovery, which in turn is not anticipated to extend beyond 78.37, given that technical indicators on a daily timeframe give strong sell signals and thus the pair should be depressed. In the longer term, however, we expect the bearish momentum to weaken, as the currency couple is approaching recent BoJ intervention levels.
Traders' Sentiment
The currency pair remains overbought to significant extent, since bullish traders constitute 73% of the market, while only 27% of them expect the Japanese Yen to gain in value relatively to the U.S. Dollar. The portions of buy and sell orders, on the other hand, are nearly equal, being 49% and 51% of the total amount, accordingly.
© Dukascopy Bank SA