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"The extent of USD weakness over the past week reduces the danger of a post-Fed squeeze on USD longs and makes it less likely that the Fed Chair will dwell heavily on foreign exchange risks when she speaks at the press conference."
- BNP Paribas (based on Reuters)
Pair's Outlook
Broad US Dollar selling caused the strong support around 122.30 to be broken, which resulted in the USD/JPY stabilising on the edge of the third support at a one month low. Today the Greenback faces a rather strong resistance cluster, represented by the weekly S2, the 55, 100 and 200-day SMAs around 121.60, which might trigger more weakness and lead the pair down to 121.00, where the weekly S3 coincides with the monthly S1. However, a rebound is also possible, with the Buck climbing over the immediate resistance cluster and closing trade around the 122.00 major level.
Traders' Sentiment
Bears allowed the bulls to regain some numbers, as 69% of all positions are now long. The share of buy orders slid from 68 to 42%.
© Dukascopy Bank SA