JPY Trading Outlook (31-07-2014)

USD/JPY An array of barriers, stops and tech hurdles were cleared out above by USD/JPY’s surge in response to much-better-than-expected US GDP data and a sizeable uptick in the Fed’s preferred inflation gauge, the PCE. Mediocre ADP was close enough to f/c to not impeded the Tsy yield & USD surges. USD/JPY ran barriers and stops at/above 102.50 & 103, as well as the May 2 swing high at 103.02. The latter was probed before the FOMC statement creates a brief spasm of buying up to 103.15 session highs, at which point the Fed’s low-for-longer mantra, even after mandates hit, prompted some profit-taking on longs. Traders would feel more comfortable about today’s breakout beyond this year’s downtrend (& reversal of the vol one) going into Friday’s US Jobs report if USD/JPY daily oscillators were not now as overbought as they were when the early April & June price peaks were reached. EUR/JPY ran stops above 137.83, the daily Kijun and 50% of the July slide, for an 137.87 intraday peak. The Fed statement falls roughly into the risk-on folder, but EUR/JPY was already in oversold recovery mode. Poor Japan June IP reinforces the need for BOJ’s QQE