JPY call bias weakest since May 18 after a bull breakout in USD/JPY

USD/JPY topped clocked six-month highs above 112.00 today, having scaled a key long-term falling trendline hurdle yesterday.
The JPY call (bearish bets) value dropped to levels last seen on May 18.

Omkar Godbole FXStreet Contributor

The USD/JPY pair crossed the three-year-long falling trendline with strength on Wednesday and rose to a six-month high of 112.38 in the Asian session today.

The bullish breakout is likely forcing investors to ditch long JPY call positions (bullish bets).

For instance, the USD/JPY one-month 25 delta risk reversals are being paid at -0.675 JPY calls - the level last seen on May 18. About 2.5-weeks ago, the risk reversals were being paid at -1.55 JPY calls.

The rise from -1.55 to -0.675 indicates falling implied volatility premium (falling demand) for cheap out-of-the-money JPY calls.

JPY1MRR

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Crypto Today: Bitcoin, Ethereum, XRP upside looks limited amid deteriorating retail demand

The cryptocurrency market extends weakness with major coins including Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) trading in sideways price action at the time of writing on Tuesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.