JPY Trading Outlook
USD/JPY has traded a 107.10-107.35 range and is contained so far by the 107.09-107.37 pivot points. Offers are clustered ahead of the 107.50 barriers, this will prevent shot-term gains. The market will likely not break out of its recent range until after the looming FOMC. Note buy stops have formed above 107.50. EUR/JPY has traded a 138.79-139.19 range so far today.
USD/JPY USD/JPY opened NY 107.25, traded 107.01/31 and closed the session 107.20. Good bids 107.00 and decent offers ahead of 107.50 barriers had spot hemmed in and the aftermath of a Tokyo bank holiday left the market in no mood to try anything too risky. The FOMC meeting on Wednesday is uppermost on traders' minds and for now they're happy with the sidelines. EUR/JPY opened the NY session 138.60, traded a tight 138.47/74 and closed the session a tad higher c 138.68. EUR/JPY was the primary driver there, lows after fresh ECB asset-backed QE comments & a strong US NY Fed idx, highs after US IP, Mfg prod. & Cap Util all missed f/c. The SNB meets Thursday which also has traders a bit edgy in case they match the ECB's rate cut.
USD/JPY A huge week for USD/JPY bulls is coming to its conclusion with prices pinned again the up TL drawn across last year's lows, last by 107.40, and at fresh 6-yr highs. US Retail Sales were on target, but July was revised up, but this did little for USD/JPY. Softness in stocks and most of the Tsy yield gains happening out the curve, not within the policy horizon, also helped to limit persistent USD/JPY demand. Talk of profit objectives at 107.40-50, stops above there and more P/T at 108. Bids kept today's lows close to 107.00 in a week were the pair gained 2.2%. Impressive. Numerous O/B levels are seen, but still no clear tops or bearish divergences. Next week's Japanese Trade Deficit report will be a key local focus, while the Fed meeting, with its SEPs & Presser will be center stage. EUR/JPY blew beyond its 38.2% of the Mar-Aug slide at 138.81 after clearing the 100-DMA o/n. The advance extended in NorAm trade after EUR/USD cleared its 5-day highs at 1.2963, triggering buy stops. The 233-DMA, 50% Fibo & 200-DMA are the next hurdles, last at 139.26/76/85. Japanese foreign asset buying, BOJ QQE & trade deficits are the main yen drags.
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