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"The performance of equities, particularly Wall Street, dictates the direction of dollar/yen. Equities have developed a relatively strong correlation with crude, and if the fall by the commodity should continue, we could see dollar/yen slip below 116.00 soon."
- IG Securities (based on CNBC)
Pair's Outlook
Even though the USD/JPY's volatility stretched out to the second resistance, the pair still ended its rally in front of the closest one, namely the monthly S2. The risk-off sentiment eventually kicked in today, causing the Buck to lose ground and drop to the lowest level this week, at the moment of writing. Technical studies support the possibility of the negative outcome, but improvements in US fundamentals could help the Greenback recover from intraday lows and limit the losses near the weekly PP. Contrariwise, weak data is to contribute to the sell-off, leading the pair closer to the 2015 low.
Traders' Sentiment
Bearish sentiment prevails, with 70% of all positions being short. Meanwhile, the share of sell orders added 14% points up to 68%.
© Dukascopy Bank SA