Sell USDJPY at current spot 119.40. Stop 120.10. Target 117

SYDNEY - The US dollar was lower against the yen and euro here as traders took profit after a rally in the greenback overnight sparked by stronger US retail sales data in November, dealers said.

However, they said the profit taking is not likely to be sizeable as traders are still awaiting Friday’s key inflation data for the month of November, as well as industrial production and capacity utilization.

At 10.00 am here (2300 GMT Wednesday), the dollar was at Y117.51, down from Y117.59 in late New York trading while the euro was at $1.3210, up from $1.3204.

Dealers said the dollar rallied overnight after retail sales data in the US jumped 1.0% in November, which was well above market expectations of a 0.2% rise and following a contraction of 0.1% in October.

Excluding automobile sales, retail sales in November rose a solid 1.1% from the 0.3% fall in the previous month.

Commonwealth Bank currency strategist Besa Deda said the rebound in the retail sales data was expected, but caution should be taken given that the early Thanksgiving holiday is likely to have brought forward a measure of Christmas shopping, which could see some unwinding in the December retail sales figures.

Meanwhile, NAB Capital strategists said the surge in US retail sales has seen economists revising up gross domestic product forecasts for the December quarter, which should support the US dollar in the short term.

The FOMC is expected to keep the US Funds rate at 5.25% at 19:15GMT, with the content of its accompanying statement of prime interest. Today”s key pre-FOMC US event risk is the 13:30GMT unveiling of the size of October”s trade deficit. Forecast: $63.7bn, from $64.3bn in September. GBP/USD rallied to intra-week highs just shy of touted offers at 1.9650 after the 09:30GMT disclosure of November”s higher-than-expected UK CPI (See 42331 ). The above-forecast CPI is good news for UK rate hawks touting another 25bp hike to 5.25% in February. Some stops are tipped above 1.9650. 1.9595 (yesterday”s high) is now a pullback support point. 1.9570 is a lower prop. Cable rallied through 1.9570 to a high of 1.9595 on the back of yesterday”s Greenspan comment that he expects the USD to continue to drift downwards until there is a change in the US balance of payments (Reuters). UK unemployment and earnings data will be revealed at 09:30GMT tomorrow. Thursday will see the release of UK November retail sales figures, and the CBI”s December industrial trends survey.

FOMC meeting - will be most important event of the next week. I think the pair will not start big move after meeting. All traders supose fed will keep the rate, but may be some information of cutting rates will appear. In this case we will see huge USD sale during next one-two weeks.

Don’t open position before and just after FOMC. Decide after what to do and wait the good price to sell USD.

Following the volatility seen Friday, USD/JPY and other players seem loath to attempt anything courageous this morning. USD/JPY has traded a relatively tight range between 116.20-50. Early Sydney and Wellington trading did see some moves in EUR/USD but this looks to have abated. USD/JPY traded a 114.90-116.51 range Friday. The pair has not seen trading on three handles for quite some time. Bidding interest was seen to have been very intense following the University of Michigan sentiment survey release with the pair jumping from the low of the session to its high. USD/JPY is currently trading just below the high. With plenty of players still short given the USD down bias seen over the course of the past two weeks or so, bidding interest is likely to be heavy below 116.00 with many players looking to buy back. Japanese importers are likely to refrain from bidding aggressively however, perhaps waiting for a more meaningful dip. Japanese exporters, on the other hand, are likely thrilled. Though no heavy sales are tipped at this time, this bloc could come back in on rallies, especially towards 117.00. A very cautious wait-and-see approach looks to be prevalent this morning. Resistance above is eyed at 116.50-60 and then ahead of 117.00. Stops are seen likely above 116.60. Support below is seen initially at 116.15, where the 200-day moving average comes in today, and on down. USD/JPY currently trades 116.23/26.

USDJPY was most impressive on friday. Avg daily move ~80 pips.
On friday morning after US NFP data it was down 100 pips from 115.90 to 114.90. after one our it started to climb to 115.50 and then 116.40. so the rally was 114.90 to 116.40.
USDJPY down trend is broken. But roolback is possible because of 150 pips move during one day.
Looking to buy on deep.

USD/JPY continues to tread water with most Tokyo players content to let the pair consolidate in the high-114 area. Offers above 115.00 from a variety of players look to be limiting the upside. Bids are seen towards the overnight low of 114.40 from Japanese investment trusts and importers continuing to look to buy into dips. The bidding interest is not all that strong but strong enough given the lighter volumes seen today. Specs seem to be eyeing a break below 114.40. This level is roughly 50% retracement from this year”s high to the low (108.95- 119.90). A break below is seen targeting a move to Fibo 61.8% retracement around 113.15. Stops are eyed below 114.40 and 114.00. USD/JPY currently trades quietly at 114.84/89.

USD/JPY is up a bit from the 114.97 low seen overseas Friday but the bias remains down. To wit, USD has been sold against EUR already this morning and stops are tipped below 1.1900 in USD/JPY and below presumed option barriers at 114.90 as well. The break below 115.00 did not see much follow-through. However, unless the pair can bounce decisively from current levels, further tests down are eyed. 115 is a very important psychological level for many players, including Japanese institutional investors. Some may look to begin hedging out their USD-denominated assets from here, leading to increasingly larger sales should the market trade successively lower. Next major technical resistance is not seen till 113.95-114.00, 113.97 the spike low seen on August 4. The MoF CAPEX survey to be released in a few minutes could send the pair lower is strong. CAPEX is one of the things the BoJ is watching carefully. If strong, it could increase the chances of an interest rate hike before the year is out. Topside resistance is seen having moved down to 115.50. More is seen up around 116.00. USD/JPY currently trades 115.20/23.