JPY Trading Outlook (05-12-2014)

USD/JPY A breakout above size 120 barriers, expiries and stops was delayed by Draghi disappointed those hoping for more explicit descriptions of further easing steps, either in the form of a clearer Q1 QE promise or a move to corporate bond buying or TLTRO tweaking. All of that was alluded to by Draghi, but as ECBers have noted recently, the timing of further easing (QE) would be after, not before, the Dec 11 TLTRO uptake. EUR/JPY’s surge stalled below the 149.12 Abenomics high on the unwinding of weak-handed short EUR trades, most to take profit. The seeming delay in ECB QE was initially viewed as a risk-off event which hurt stocks and limited the late Ldn breakout in USD/JPY beyond 120.00 to 120.25. Just as EUR shorts were looking to book some profits ahead of US NFP Friday, so, too, were USD/JPY longs, but in both cases the USD’s losses were trimmed as macros and longer-term participants bought into the USD dip. USD/JPY’s 119.32 low was a 38.2% retrace of this week’s 117.86-120-25 range. Prices are back by 120 heading into the NY close. EUR/JPY is closing below its 148.43 daily pivot (Nov 21 hi) & on hourly tenkan & kijun support.