The yen was heavily sold last night in response to market rumors that BOJ will only hike 10-15 bps, rather than the highly anticipated 25bps. EUR/JPY and USD/JPY squeezed the shorts, as well as our stops, leaving many traders shaking their heads. Positioning ahead of Friday's interest rate announcement has been extremely difficult as Japan is likely to end its 64-month span of ZIRP (zero interest rate policy). The countless and differing opinions of exactly how the BOJ ends ZIRP, how much, and for how long have made the yen products a real bears lately.

We shift our focus back to EUR/USD for now that we have just recently stopped into below 1.2700. The target remains 1.2620 at channel and .618 support, but June resistance 1.2680 is presenting itself as one pesky customer. A heavily bid EUR/JPY mentioned above is also tempering the euro selling.

Here's an updated look at our EUR/USD target. .618 Fib retracement and daily channel support are lining up at 1.2620 providing a solid target for our short positions. Please don't forget your money management in this especially tricky market. If you are short from 1.2690 targeting 1.2620, your reward is 70 points, which means your stop should be half that at 1.2725. June resistance at 1.2680 turned support is shown here, but will likely be difficult to overcome while EUR/JPY stays above 146.50. However, we're still bearish EURJPY while below 146.00.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.