JPY Trading Outlook (17-07-2014)

USD/JPY Another tight but higher range for USD/JPY between support at 101.64 (daily Tenkan and 200-HMA) and resistance at 101.80 (offers tied to the 61.8% of the 102.27-101.06 slide). US data were mixed but the Tsy curve flattened on expectations of eventual Fed tightening; a prospect today’s Beige Book appeared to reinforce. More offers are noted into the 200-DMA and daily Cloud base by 102, with light stops above. Far more active was EUR/JPY via a second wave of EUR selling that breached the July 10 nadir of 137.50 by a pip in NorAm trading. That result came despite tighter EZ peripheral spreads and hefty rallies in EZ equities. ECB reported waning reserve manager demand for the EUR in recent qtrs, despite rising total reverse needing to be diversified rising. A below f/c EZ Trade surplus also reminded of EUR risks in a NIRP ECB environment. A clear break below 137.50 would target the weekly Bolli by 137 last. NZD/JPY was the other big loser after tumbling Fonterra milk prices and volumes and below F/C Q2 CPI dimmed RBNZ rate hike hopes. Decent support by 88.20 there. MOF & Dept Store sales from Japan tonight.