JPY Trading Outlook (27-06-2014)

USD/JPY A mixed day for the yen, but USD/JPY had some downside drama, breaking below the 200-DMA, again, the June lows at 101.60 and the 61.8% of the May-June rally at 101.57. A fresh drop in Tsy yields and early weakness in equities, plus a newswire-story-driven dip in EUR/JPY took out those supports after mediocre US Consumer Spending results. But as the NY session nears its conclusion, it’s too close to call which side of the 200-DMA (101.69) prices will end on. The pair already looks weak technically, being forced lower by the daily Cloud as the Tenkan crossed below the Kijun today. A surfeit of stories about Japanese asset reallocation into stocks, mostly domestic, and into foreign bonds ahead of the formal GPIF reallocation later this year, has not been enough to get USD/JPY back above its May or April highs. Toss in US rates not unable sustain uptrends out the curve and 2-yr ylds now looking top-heavy again by 50bp and USD/JPY will need all the local help it can get. EUR/JPY tumbled after another 139/200-DMA rejection and then on an MNSI ECB story. A rebound in stocks from morning lows helped crosses recover. CPI, Spending & Sales from Japan tonight.