JPY Trading Outlook (28-01-2015)

USD/JPY extended the pullback that began after yet another failed breakout above the daily Cloud in Asia, first falling in sympathy with weakness in stocks & Tsy yields as Greek concerns mixed with US earnings worries, in part due to the USD’s strength the past several months. A huge downside miss from US Durable Goods yanked USD/JPY down to the up TL off the last five sessions’ lows, then at 117.31 (low was 34). Much better US data later in the morning teamed with the TL support to push the pair to offers at 118 by the hourly Cloud & 200-HMA. US stocks recovered some of their heavy intraday losses, but are underperforming the N225 futures. US earnings misses due to USD strength contrast with a smaller-than-f/c Japan Trade Deficit last month due to post QQE2 USD/JPY gains & oil’s dive, the former consolidating since Dec 8. Tumbling oil prices are better for Japan than the US. EUR/JPY has rebounded to the 134 vicinity as oversold EUR trades see post ECB QE & Greek election profit taking, not that there aren’t still major risks for the EUR. FOMC statement Wed is the next key event. Any change is language is likely to be marginal though.