Tue, 24 May 2011 00:00:00 +0200

Yen Continues to Ease

Despite yesterday's ?risk-off? trading environment the yen failed to make significant gains on the back of safe haven inflows. As tensions escalated in the forex markets and equities declined with the flair up in the European debt crisis the Japanese yen typically sees strong buying pressure as a result of safe have bids. However, yesterday the yen failed to hold a majority of its gains. This highlights the shifting trend in the yen as market forces focus more on Japanese fundamentals. The USD/JPY fell to a low of 81.32 after beginning the day near the 82 level before closing down slightly at 81.79. The failure of the yen to keep its safe haven gains shows a shift in the trend of the strengthening yen following deteriorating economic fundamentals. Yesterday the BoJ issued a negative economic assessment. The report for the month of May shows production has fallen and domestic private demand continues to weaken following the earthquake and tsunami on March 11. The Japanese economy contracted by 3.7% on an annualized basis in Q1. As traders continue to focus on Japanese economic fundamentals and not safe haven inflows the yen could continue to weaken from its early May high. Further USD/JPY targets may be retracement levels from the April to May move at 82.50 followed by 83.25.

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading. ForexYard

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading. ForexYard