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"Global risk off is claiming its next victim. The BOJ tried to respond with negative rates, ECB tried to sound more dovish. The next target for markets is the Fed."
- Crédit Agricole (based on MarketWatch)
Pair's Outlook
During the last two days USD/JPY has nearly negated all its gains after Jan 19, as the monthly pivot point was unable to stop Dollar's depreciation yesterday. The currency pair is now testing the next monthly pivot at 117.50, which has a good chance of triggering a rally before another bearish wave. The Buck might rebound up to the weekly S1 at 118.62. Nevertheless, the price should soon slide down to 116 yen, where we are likely to see strong demand because of the last year's low.
Traders' Sentiment
Interestingly enough, precipitous decline did not materially affect the distribution between the shorts (69%) and longs (31%). In the meantime, the portion of sell orders plunged from 75 to 55%.
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