JPY Trading Outlook (10-12-2014)

USD/JPY This week’s retreat from near the ’07 highs in the N225 and USD/JPY today flushed out recent buyers of both, sending 1-mo vols surging to their highest since Sep ’13 and above 12. Riskies swung back to a put bias for the first time since mid-Nov after reaching the highest call bias since May ’13 last Thur. Sell stops were run below 119.15 (200-HMA, daily Tenkan & recent 50% Fibo) 119.32 (up TL off the Nov 10 7 27 lows) 119, 118.50 & 118. The 117.90 low was close to the 21-DMA and the weekly on-close pivot point at 117.86, the Nov 1 low. The worst of it was over by the Ldn close and prices then rebounded to between the 119.32 TL and the 119.55 Tenkan. A daily close below the latter would be the first since clearing it on Oct 20 at 106.97. That the recent uptrend was so deeply penetrated and O/B daily and weekly studies have rolled over from o/b readings suggests there could be more risk-off unwinding of longs here and in the crosses. But with 23.5b of 120 expiries ahead of yr-end, consolidation may suffice. GBP/JPY’s collapse ended by the Kijun, EUR/JPY’s by the 21-DMA: AUD/JPY is below both. New JGB yld lows despite the Fitch warning.