JPY Trading Outlook (02-09-2014)

USD/JPY has traded a narrow 104.08-104.28 range, marginally breaching the 104.27 pivot point. The current risk appetite within the market keeps USD/JPY elevated. The overall scope is for gains higher, but option-related selling expected to continue ahead of 104.50 options barrier. There are 250M worth of 104.20 option expiries which are likely to attract USD/JPY in the short-term. Note that a huge amount of 136.50 EUR/JPY strikes are set to expire at the NY cut on Thursday, these will likely attract the cross as we get closer to the cut. The failure high at 137.20 on Friday now offers supply while interim resistance comes in at 137.07 today. A break above the 137.20 level will likely trigger buy stops.