USD/JPY Rebounds from 104.92/81

USD/JPY Rebounds from 104.92/81

"The yen will depreciate further. There is still that prospect of the Bank of Japan stepping up their quantitative easing, meanwhile the U.S. is unwinding theirs." - St. George Bank Ltd. (based on Bloomberg)

Pair's Outlook

USD/JPY has just confirmed 104.92/81 as the new support and is therefore poised for further gains. This is particularly true considering that the currency pair is bullish on all three relevant time-frames (on daily, weekly and monthly charts). The initial target for the rally should be 105.96/85, while a more serious test of the upward momentum is likely to take place near 106.57/40.

Traders' Sentiment

The sentiment with respect to USD/JPY is not as bearish as it was on Tuesday, when 69% of positions were short; but there still remains a distinct difference between the amounts of bulls (38%) and bears (62%). Despite the recent sharp fluctuations in the ratio between the longs and shorts, most of the orders are the buy ones - 73%.