Yen strength
“The all time low on the dollar yen pair (which in terms of daily volume traded in the currency markets is second only to the Euro dollar) was in March of 2011 when it hit 76.54 during a late evening dip in New York in thin markets.” I also personally believe that the Japanese Central Bank are likely to try and play a different game to that of recent years which has been essentially to throw a brake in front of progressive yen strength and so merely look to halt the yen’s ascent. The current BOJ head Shirokawa would be well advised to actually go back to first principles in currency trading — that being that “the trend is your friend”. Actually leaning into the wind on a reversal back above the 80 level, instead of against it, will most likely prove much more fruitful.
Also, the recent Euro strength is probably very unwelcome in the eurozone and will be adding extra pressure to Spain, Italy, Portugal & Greece, each of which desperately need exports to fuel an economic recovery. Consequently, co-ordinated BOJ & ECB intervention cannot be ruled out and which would “kill 2 birds with one stone”. With a fundamental and technical backdrop alignment, a long position in this pair has high odds of success in our opinion.
Dollar / Yen - Chart
November 2012
| www.financial-spread-betting.com | 79