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Economic news
The yen strengthens against the dollar after four consecutive days of losses
The yen continues to stay in the top focus of investors and it seems it will remain so until the Bank of Japan’s meeting (21-22 January), at the latest.
The Japanese currency has been experiencing serious downtrends in the Forex charts recently. However, the yen managed to get a rebound during Monday’s trading session.
It rose by 0.6%, reaching an intraday high of $89.65. The Japanese currency performed high against all 16 major counterparts, ending a four-day decline against the dollar.
The yen was supported by comments from the country’s economy minister saying that a further weakening of the yen can have a negative effect on people’s livelihood by increasing import prices. Following his statement, speculations about the end of the depreciation for the yen began to surface, thus boosting its value.
The dollar was afflicted by comments from US Fed chief Ben Bernanke implying that the Fed’s asset-purchase plan is likely to continue throughout the whole year. Mr Bernanke warned that the US economy is still very frail and the recovery could be endangered by political standstill over the deficit.
The Bank of Japan is under pressure by the newly-elected Prime Minister of the country to cope quickly with deflation by applying ‘bold policy measures’ and setting an inflation target of 2%. Until then, the yen is expected to hold lower rates against its major currency counterparts.
Technical analysis
USD/JPY
During the yesterday’s session, the dollar traded in the range of 89.05 - 89.65 JPY. This morning the currency pair is trading at 88.65 - 89.15.
If the dollar successfully overcomes the resistance zone of 89.00-89.30, its aim will be reaching and testing the 89.50-89.65 zone. If successful, the upward trend will continue to 89.85 - 90.00. If it falls below the support zone of 88.85-88.65, the next support zone will be at 88.35 - 88.10. In case of a breakdown, the downward trend will continue to 87.85 - 87.65.
Source: dfmarkets.co.uk
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