We took a light 15 point stop in USD/JPY last night before it moved 30 points below our 122.45 entry to a 122.14-area low. But since then the dollar has regained ground following a lower-than-expected Pending Home Sales Index, but a stronger-than-expected Factory Orders number. At the time of the release, the US 10-yr bond yield was trading just around the 5.0% technical support level that I have been talking about in recent columns. After the economic data, bond traders came in to sell bonds driving yields 4 bps higher to their current yield of 5.41%.

I am still bearish USD/JPY while below 122.53 for a move into 121.65. But considering the US equity markets close at 1:00 p.m. and the bond markets at 2:00 p.m. the price action in the remaining New York session could be lethargic at best, so I am inclined to sit on my hands.



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

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