JPY Trading Outlook (07-08-2014)

USD/JPY never stood a chance as the markets’ attention was focused on the meltdown in European equities and the attendant move lower in DM interest rates after a bad miss in German Industrial Orders and a negative print for Italian GDP. As one would expect, JPY and CHF were the flavors of the day. However, the highlight of the session was a midday drop down the elevator shaft in USDJPY as a break of the 200 dma (102.24) triggered a large futures liquidation. It pulled the USD lower across the board. Fat fingers were blamed at first but seeing the pair still hasn’t recovered, I’m inclined to think it was a legitimate trade; a long liquidation as real money starts to become concerned that the top in stocks might be in. USDJPY held Fibo and the 40 dma support for now, both of which are right around 102.84 and represent the last foothold before a run back to the lows.