USD/JPY – Yen Regroups After Sharp Losses

The Japanese yen has rebounded on Monday, posting strong gains. Late in the European session, the pair is trading in the low-109 range. The yen was stream rolled by the US dollar on Friday, losing 150 points. The sharp drop was in response to sharp job data out of the US. On the release front, there are no Japanese or US releases on Monday.

Early Tuesday, the BoJ will release a monetary policy statement, a key event which can have a significant effect on the direction of USD/JPY. Any hint of additional stimulus from the BoJ could push the yen lower. A press conference will follow the release of the statement. Last week, Japanese data was a mix. The quarterly Tankan Indices, which are similar to the US PMIs, moved in opposite directions in September. The Tankan Manufacturing Index improved to 13 points, edging up from last month’s figure of 12 points. The Service Index also came in at 13 points, but this was down sharply from the previous reading of 19 points.

US employment data sparkled on Friday. Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong job numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later.

USD/JPY for Monday, October 6, 2014

USD/JPY October 6 at 12:15 GMT

USD/JPY 109.23 H: 109.81 L: 109.16

USD/JPY Technical

• USD/JPY has been moving downward in the Asian and European sessions.
• 108.58 is the next support level line.
• 109.82 is providing resistance.
• Current range: 108.58 to 109.82

Further levels in both directions:

• Below: 108.58, 107.68, 106.85 and 105.44
• Above: 109.82, 110.68, 112.48, 113.68 and 114.65

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the yen has posted gains. The ratio has a majority of short positions, indicative of trader bias towards the yen continuing to move higher.

USD/JPY Fundamentals

• There are no Japanese or US releases on Monday.

*Key releases are highlighted in bold

*All release times are GMT

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