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11 Dec 2014
USD/JPY closes below daily tenkan for 1st time since Oct 21
FXStreet (Bali) - For the first time since Oct 21st, the USD/JPY has closed below the daily tenkan line, with Wednesday's sharp decline stopping dead circa 117.75/80, intersection of the daily kijun.
On Wednesday, USD/JPY shed over 2 big figures off its value, from 119.65 down to 117.75/80 by the NY close; and while trader's conviction to reset longs on Tuesday's bounce was still quite solid following the vicious bounce to retest 120.00 periphery, Wed's close at day lows, with virtually no bounce, communicates that dip buyers are running to the exits in earnest, as profit-taking and fast money sales continue to absorb bids on the way down.
The decline in US equities, demand for Treasuries and an overall risk-averse sentiment across global markets, has provided the perfect excuse for another flush out of Yen shorts, with the currency extending its weekly lead given the overstretched sell-off in recent times. While the USD/JPY uptrend is still firmly in place, there is no signs suggesting that selling is over, and with "E-commerce dealers at the major banks reporting sharply reduced liquidity meaning more volatility in a heavily-positioned USD/JPY market", Sean Lee, Founder at FXWW notes, chances are of a further unwinding of positions as traders take profits ahead of year-end.
Vaeria Bednarik, Chief Analyst at FXStreet, notes: "The market seems to have forgotten about upcoming elections on Sunday, and all yen movements are purely risk-driven. On Sunday, Abenomics will be under scrutiny as PM Shinzo Abe dissolved the Parliament and called for elections seeking for a fresh mandate for its policies. The Yen can came under renewed pressure if Abe’s party wins, as it will mean his easing policy will continue at least for two more years. But in the meantime, the USD/JPY presents a strong bearish tone at least in the short term, as the 1 hour chart shows price extending below its 100 and 200 SMAs, whilst indicators continue to head lower well into the red. In the 4 hours chart indicators are also biased strongly south below their midlines, supporting the shorter term view. The critical support to follow comes at 117.90, this week low, with investors speculating on a possible test of 116.00 if the mentioned support gives up."
On Wednesday, USD/JPY shed over 2 big figures off its value, from 119.65 down to 117.75/80 by the NY close; and while trader's conviction to reset longs on Tuesday's bounce was still quite solid following the vicious bounce to retest 120.00 periphery, Wed's close at day lows, with virtually no bounce, communicates that dip buyers are running to the exits in earnest, as profit-taking and fast money sales continue to absorb bids on the way down.
The decline in US equities, demand for Treasuries and an overall risk-averse sentiment across global markets, has provided the perfect excuse for another flush out of Yen shorts, with the currency extending its weekly lead given the overstretched sell-off in recent times. While the USD/JPY uptrend is still firmly in place, there is no signs suggesting that selling is over, and with "E-commerce dealers at the major banks reporting sharply reduced liquidity meaning more volatility in a heavily-positioned USD/JPY market", Sean Lee, Founder at FXWW notes, chances are of a further unwinding of positions as traders take profits ahead of year-end.
Vaeria Bednarik, Chief Analyst at FXStreet, notes: "The market seems to have forgotten about upcoming elections on Sunday, and all yen movements are purely risk-driven. On Sunday, Abenomics will be under scrutiny as PM Shinzo Abe dissolved the Parliament and called for elections seeking for a fresh mandate for its policies. The Yen can came under renewed pressure if Abe’s party wins, as it will mean his easing policy will continue at least for two more years. But in the meantime, the USD/JPY presents a strong bearish tone at least in the short term, as the 1 hour chart shows price extending below its 100 and 200 SMAs, whilst indicators continue to head lower well into the red. In the 4 hours chart indicators are also biased strongly south below their midlines, supporting the shorter term view. The critical support to follow comes at 117.90, this week low, with investors speculating on a possible test of 116.00 if the mentioned support gives up."