JPY Trading Outlook (01-09-2014)

USD/JPY Nothing stood in the way of the USD bulls in a quiet pre-holiday NorAm session. A bad miss on Japanese Housing Starts (-14.1%) and continued pressure on JGB yields below 0.50 bps added fuel to the debate about the faltering state of the economy, with markets pricing a greater possibility of more QE (and a weaker yen). Today marked the highest weekly/monthly close since January and the monthly chart completed a breakout higher of a bullish pennant formation. Many sellside strategy groups are raising their sights to 110, but the more immediate hurdle comes at the .618 fibo of the 2007-2011 downtrade (105.48) and which also happens to be the January highs.