Softer US data, especially pending home sales and the Markit PMI, has put a dent in the US dollar.
USD/JPY has weakened about a half-cent today and is pressing 107.60. Bids at 107.50 and 107.20 may buffer the decline. The weekly CFTC positioning data showed a hefty squeeze on shorts last week and that leaves fewer shorts left to be chased out.
I see good support in the 107.40/50 zone and expect that to hold as worries about Brazil fade but the market is likely to remain cautious until after the FOMC decision on Wednesday. Ultimately, this will be the end of QE3 and that’s a scary headline for many markets.
