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"Based solely on the fundamental drivers of a widening interest-rate spread and increased yen outflows, it wouldn't be odd to see the yen weaken to 140 per dollar over the next two years."
- Nomura Holdings Inc. (based on Bloomberg)
Pair's Outlook
Although the US Dollar came under a strong selling pressure after hitting the resistance at 121, the currency has not yet fallen beneath 120. Accordingly, there is a high chance USD/JPY will soon re-challenge the weekly and monthly R1 levels. In case of success the pair will be expected to extend the rally beyond the current 2014 high—to the 124-125 region. In case of failure we might see a test of the up-trend at 118.
Traders' Sentiment
Right now there is no significant difference between the bulls (52%) and the bears (48%). However, there are considerably more traders planning to purchase the greenback than on Dec 26—as many as 76% of pending orders are to buy the Dollar (only 55% on Friday).
© Dukascopy Bank SA