Friday, 20 February 2009

Bank of Japan nudging the yen down

I am particularly pleased with the call I made some weeks ago on pending weakness for the Japanese yen. At the time there were the beginnings of a topping pattern in the technicals but all of the commentators were still insisting that the Japanese currency was part of the safe haven matrix. Meanwhile the habitual dollar bears were proselytizing about the risks to the greenback and some were urging investors to seek out the relative safety of the yen.
It seems almost certain that the Japanese central bank is partly responsible for the drop as it tries to engineer a more favorable exchange rate for their exports.If that is so they will probably be targeting considerably lower levels.
The point marked by the arrow on the chart for the exchange traded fund, FXY, which tracks the yen, coincides with the 200 day EMA and seems feasible in the intermediate term.

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