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Short-term USD JPY May Be Overbought

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Mar 22, 2011.

  1. forextrends24

    forextrends24 New Member

    Mar 27, 2009
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    Today’s sample of Forex Analysis from ForexHound.com

    The Japanese Yen weakened for a second session against all of the major currencies in a move that many traders suspect is renewed selling pressure from the Group of Seven nations. Following a downward spike on Thursday to 76.37, the G-7 was asked to intervene in an effort to curb the Yen’s appreciation and help support the devastated Japanese economy. Some traders feel the Yen at 80.00 is probably the line in the sand that the Bank of Japan prefers. This level is roughly the price the market stopped at in November when it bottomed at 80.24.

    Since the 9.0 earthquake, the tsunami and nuclear reactor problems over seven days ago, the Japanese currency had rallied sharply higher amid speculation investors were repatriating assets to fund an estimated 10 trillion ($123.6 billion) for reconstruction. Since late last week, following a special request from the Bank of Japan, the G-7 has initiated a very successful coordinated intervention. The real challenge is whether it can continue to counter the wave of Yen expected to be repatriated. Officially, the G-7 promised to “provide any cooperation” with Japan.

    Despite the promise to pressure the Yen, technical factors are indicating possible overbought conditions in the USD JPY. Although the outlook for the U.S. Dollar/Japanese Yen is higher because of the expected additional intervention pressure, there may be a relief break brewing which may trigger a sharp retracement to the downside before fresh buying pressure hits the market.

    Read full article at ForexHound.com as well more Forex Trading articles including Forex Technical Analysis and Forex Education

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