JPY Trading Outlook (18-02-2015)

USD/JPY The yen fell far and wide, as it stood out as a safe short given new closing trend highs in the key Japanese stock indices, USD-JPY 2-yr yield spreads rising to their highest since Jan 6, indications from inside and outside the Abe govt that there is less resistance to a weaker yen and after a key technical buy signal in USD/JPY. Monday and today’s lows were rejected by 61.8% of the Feb range at 118.10, with help from the Kijun at 118.16. Reports that the Greek can would be kicked down the road at Wed’s ECB meeting on ELA extension gave risk a little boost and took USD/JPY beyond offers and stops circa 119. US econ data was not impressive, but the drumbeat for Fed rate hikes grows louder. Offers are at 119.50-57, 119.90-120 and into 120.50, where this month’s rally was rejected last week. EUR/JPY managed to clear offers at 136 on Greek ELA and bailout hopes, but that cross’s gains were less than CAD/JPY’s. AUD/JPY also had a strong session, making new Feb highs and retracing 50% of 97.39-89.32 slide at 93.35, where the daily Kijun stood. M&A of Japan Post for Toll Group noted there. Only BOJ tonight might be on 2% CPI timing extension.

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