USD/JPY shorts are scrambling for cover after a run at the downside after the horrible US home sales data turned out to be a bear-trap. The move seemed logical given the expiration of large options, which in theory should have reduced one source of demand. Lower yields and the dire US outlook contributed to the quick slide but US equities have steadied as have bonds and USD/JPY traders were suddenly left “short in the hole”.
From session lows at 84.04 immediately after the data, we now threaten the top of the range at 84.68. Very substantial resistance is seen int he 84.75/90 area, while stops are stacked above 85.00.
