Daily Forex Analysis on USD/JPY and EUR/USD pairs
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Economic news
The yen reached its weakest level in a year and a half
Today the Forex markets are dominated by the Japanese yen’s fall to its lowest level since April 2011, after election victory by Shinzo Abi’s Liberal Democratic Party (LDP).
LDP emphasized on their determination to speed up Japan’s sluggish economic recovery through aggressive monetary policy focused on weakening the yen. The Japanese economy has long been suffering from its strong currency, as a strong yen makes Japanese goods too expensive to foreign buyers, thus decreasing export, which is one of the main driving forces of Japan’s economy. As the LPD won a large number of seats in last week’s elections, market makers are expecting that the monetary policy will swiftly be ratified.
The euro continues to strengthen against the dollar
The euro managed to stay steady during the early Asian trading session on Monday. The single currency gained support from signs of progress in dealing with the Eurozone crisis. Optimism is drawn from a deal over banks’ supervision reached during a meeting of Eurozone finance ministers last week.
The looming fiscal cliff in the US continues to be in the focus of investors. Economists’ main concern is that the spending cuts and tax increase planned to commence in January could slip the US economy into recession and also put pressure on the frail global economy.
Technical analysis
USD/JPY
During the session on Friday, the dollar was trading in the range of 83.35 - 83.95 JPY.
This morning the pair is trading at 83.95 - 84.20.
According to analysts, if the dollar successfully overcomes the resistance zone of 84.15 - 84.30, its aim will be reaching and testing the zone of 84.50-84.70. If successful, the upward trend will continue to 84.90 - 85.10. If it goes below the support zone of 83.95 - 83.75, the next support zone will be at 83.55 - 83.35. In case of a breakdown, the downward trend will continue to 83.15 - 83.00.
EUR/USD
On Friday, the euro increased its level from 1.3065 USD to 1.3170 USD.
This morning, the currency pair is trading at 1.3145 - 1.3165.
If the resistance zone of 1.3165 - 1.3185 USD is successfully overcome, the aim of the euro will be reaching and testing the zone of 1.3210-1.3230. If successful, the upward trend will continue to 1.3255 - 1.3275. If it goes below the support zone of 1.3145 - 1.3115, it will find a next support at 1.3080 - 1.3060. In case of a breakdown, the downward trend will continue to 1.3035 - 1.3015.
Source: dfmarkets.co.uk
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