- Shinsei Bank (based on CNBC)
The USD/JPY currency pair failed to rebound on Tuesday, due to the continued sell-off in the Chinese equity market. In wake of this event, the pair inched closer to the 119.00 level, which is likely to be breached today, as another set of weak Chinese fundamentals sparked risk aversion. The immediate support around 118.90 will doubtfully hold the losses, leaving the door open for a decline towards the Oct low at 118.06. Nonetheless, a positive surprise in US data later today could trigger a buying spree, help the Greenback negate daily losses and even cause trade to close in the green zone.
Traders remain confident in the USD/JPY underperformance, as 60% of all positions are short. Purchase orders surged from 52 to 59%.