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USD/JPY: looking for a sustained break above 121.50 - Scotiabank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 21, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Guatemala) - Eric Theoret, CFA, CMT FX Strategist at Scotiabank explained that CFTC data (for the week ended Dec 15) detailed a remarkable $4.2bn narrowing in the net short JPY position to $2.7bn, leaving those remaining JPY bears vulnerable in the aftermath of the BoJ-driven turbulence.

    Key Quotes:

    "The positioning adjustments have left USD/JPY well below levels implied by 2Y yield spreads (bottom chart). We look to upside risk and the potential for a rally toward 123.50.

    USD/JPY short-term technicals: neutral, risk of gains—momentum indicators are modestly bearish, the trend signals are remarkably neutral, and USD/JPY is consolidating just below a cluster of medium-term MA’s (100 day MA near 121.50 and 50 day MA at 121.80). Support is expected and 121.00, and we look to a sustained break of 121.50 and the potential for a rally above 123.00."
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