9 Jun 2015
USD/JPY: Opportunity to buy dips? Sellers to protect 125.00
FXStreet (Bali) - USD/JPY failed miserably on its attempts to hold above 125.00 handle during Monday, following a bewildering USD sell-off - mostly a withdraw of liquidity -, just as further evidence emerges that upbeat US jobs figures could force the Fed to consider the start of its tightening camping earlier-than-anticipated.
USD/JPY: Opportunity to reinstate longs?
At present, the pair trades circa 124.70, with sellers having regained control short term as long as 125.00 is capped. However, traders should be reminded that the bear momentum in USD/JPY is still developing within the context of a solid uptrend, which should see any excessive selling met by strong buying interest.
While fundamentals in Japan seem to be gaining momentum, the latest prove being a surprisingly positive Japan first quarter GDP revision from an initial estimate of 2.4% to 3.9%, large specs have been betting aggressively into JPY shorts. Nonetheless, the trendiness in USD/JPY, while supported by widening US/JP yield differentials, is still missing a key element to be sustained, that is, renewed market conviction of further easing by the BoJ this year.
USD/JPY technicals
Technically, Valeria Bednarik, Chief Analyst at FXStreet, notes: "The 1 hour chart shows that the price recovered partially from the level and trades right around its 100 SMA, but in the same chart, the technical indicators maintain their strong bearish slopes near oversold levels, limiting chances of an upward recovery."
"In the 4 hours chart, the technical indicators have turned sharply lower and are about to confirm a bearish breakout, keeping the risk towards the downside, particularly on a break below 124.30, the immediate support", Valeria adds.
USD/JPY: Opportunity to reinstate longs?
At present, the pair trades circa 124.70, with sellers having regained control short term as long as 125.00 is capped. However, traders should be reminded that the bear momentum in USD/JPY is still developing within the context of a solid uptrend, which should see any excessive selling met by strong buying interest.
While fundamentals in Japan seem to be gaining momentum, the latest prove being a surprisingly positive Japan first quarter GDP revision from an initial estimate of 2.4% to 3.9%, large specs have been betting aggressively into JPY shorts. Nonetheless, the trendiness in USD/JPY, while supported by widening US/JP yield differentials, is still missing a key element to be sustained, that is, renewed market conviction of further easing by the BoJ this year.
USD/JPY technicals
Technically, Valeria Bednarik, Chief Analyst at FXStreet, notes: "The 1 hour chart shows that the price recovered partially from the level and trades right around its 100 SMA, but in the same chart, the technical indicators maintain their strong bearish slopes near oversold levels, limiting chances of an upward recovery."
"In the 4 hours chart, the technical indicators have turned sharply lower and are about to confirm a bearish breakout, keeping the risk towards the downside, particularly on a break below 124.30, the immediate support", Valeria adds.