JPY Trading Outlook (11-07-2014)

USD/JPY Europe sold risk this morning, as paroxysms on the periphery joined forces with poor Trade data from China & terrible IP reports to send JPY shorts scrambling to cover, particularly on crosses. EUR/JPY ran sell stops below the preceding two days’ lows and then the June lows. 137.50 is the low as we head toward the NY close, but some serious psychological and technical damage is in the offing with the first close below the 233-DMA (138.29) since 2012 and the lowest lows since Feb. EZ stocks pared some of their losses, but peripheral bond yields are near their multi-month highs, along with spreads to the core. A weekly close below the weekly Cloud top at 138.36 is the concern for Friday, with just German CPI to guide prices. USD/JPY pierced its June lows, but doesn’t look as though it will be able to close above the 233-DMA at 101.42, while the weekly Cloud top at 101.57 is at risk Friday. Demand, semi-official or not, was found ahead of 101, staving off a test of crucial supports at 100.76 and 100.62-3. AUD/JPY finally found 100-DMA & Cloud support; NZD/JPY the 21-DMA. USD/JPY vols bounced, RR’s fell, but no clear reversal yet.