USD/JPY up 50 pips to 120.43
The euro is the big story today after Draghi put a December deposit rate cut and more QE on the table. When the market gets an idea like more QE or more-deeply negative rates, it won't stop until the goods are delivered so the euro could fall substantially from here.
But in the shorter term, another trade that's unfolding is USD/JPY. It tried breaking out to the downside last Thursday but was rescued by a combination of better jobless claims, higher CPI and good risk sentiment.
Another good jobless claims number today and upbeat sentiment leading to yen selling is boosting the pair further. However, we're starting to get to the top of the seven-week range. Within the next 40 pips, resistance is the October high, the downtrend and the 55-day moving average at 120.82.
More critical resistance doesn't appear until the Sept high at 121.24 but even there, the risk/reward ratio for longs is poor at the moment. My trade is to be patient and look to sell near the 55-dma in the expectation that the BOJ won't deliver anything for the doves on Oct 30. At the same time, keep an eye on US data.
