"The business side of Japan worries about the political push-back on the weaker yen because of history, I wouldn't really worry about the U.S. policy makers going after a weak currency." – Allen Sinai, Decision Economics (based on Bloomberg)
With risk-aversion driving the markets yesterday, the USD/JPY currency pair ignored the immediate demand cluster and dropped below the 113.00 mark. Technical indicators keep giving bearish signals in the daily timeframe, but the nearest resistance area is now unlikely to be capable of preventing the Buck from edging higher.
As a result, there is nothing holding the US Dollar from rising or falling today, meaning that fundamental events are likely to provide impetus.
The Greenback has the potential to reclaim the 114.00 mark and erase yesterday's losses, but downside risks remain, with the weekly S2 at 111.50 being the closest support.
Traders remain equally divided between bulls and bears, while 70% of all pending orders are to purchase the US Dollar (previously 69%).
Provided by Dukascopy Bank