Forex: USD/JPY buyers faked out; 88.90 lowest after 90.00 kiss
Forex pairs in this Article »
USD/JPY
FXstreet.com (Barcelona) - After an initial spike to 90.05 on the news that the BoJ will adopt a 2% inflation goal combined with open-ended asset purchases, the market just faded the move up, taking the USDJPY back below the pre-BoJ broken support at 88.30, and on the process, penetrating into fresh session lows at 88.95, and the party for Yen bulls looks to still be going on.
The retracement off highs to new lows has been fast and furious, and for those sellers riding the ongoing waves, Jan 4 high at 88.40 seems to be a sensible target to achieve in the short run. Correction higher towards 89.30 should find committed sellers camped in order to have an opportunity to enter the market from a 'risk reward' value area. The area between 88.75 and 88.90 is likely to present some battle for traders betting on a downmove to 88.40, yet the recent price action supports the bias down.
One of the underlying reasons of this aggressive downmove, could be that despite the BoJ has communicated a change in strategy to now pursue open-ended bond buys, however, there is no additional purchases of ETFs or REITs by BOJ until early 2014, thus no real change in policy for the next 12 months. Also note the Yen positioning was extreme short, which suggest that a return to a point of equilibrium, be it the 20-day EMA or other level of focus by the market, was a possibility.
The retracement off highs to new lows has been fast and furious, and for those sellers riding the ongoing waves, Jan 4 high at 88.40 seems to be a sensible target to achieve in the short run. Correction higher towards 89.30 should find committed sellers camped in order to have an opportunity to enter the market from a 'risk reward' value area. The area between 88.75 and 88.90 is likely to present some battle for traders betting on a downmove to 88.40, yet the recent price action supports the bias down.
One of the underlying reasons of this aggressive downmove, could be that despite the BoJ has communicated a change in strategy to now pursue open-ended bond buys, however, there is no additional purchases of ETFs or REITs by BOJ until early 2014, thus no real change in policy for the next 12 months. Also note the Yen positioning was extreme short, which suggest that a return to a point of equilibrium, be it the 20-day EMA or other level of focus by the market, was a possibility.
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