Dollar vs Yen Chart 6 May 2010

The dollar yen continues to struggle higher but without any great conviction at present with yesterday’s down candle symptomatic of this lack of momentum at present.  However, the low of yesterday did find some support from the 9 day moving average and this pattern appears to be continuing in early trading today with the pair failing to sell off sharply as a result.  The 40 day moving average is perhaps the key technical indicator for the yen to dollar pair at present having provided a solid barrier to any short term pullback over the last few weeks and this is currently residing in the 93 price area which should provide a cushion in the event of a further fall.  Longer term the outlook remains mildly bearish with the weekly chart reinforcing this view, particularly given the level of support from the 9 week moving average.  However, we are now running into serious price congestion between 95 and 100 and only some sustained momentum will drive the pair higher and through this congested region.  Should we achieve 100 and above in due course then the ensuing rally could develop into a longer term trend, particularly if we clear the 200 week moving average which is currently sitting at 104.  The price action this morning suggests that bullish sentiment remains in place at present with a relatively deep test in early trading.

You can catch up with the fundamental news for the US at my weekly newsletter while Japan is still closed for the Golden Week celebrations.

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Dollar vs. Yen Chart 27 Jan 2010

Following the tweezer top reversal candle pattern of earlier in the month, the dollar yen chart pair has continued to slide lower, once again moving below all three of our short term moving averages (9,14 & 40 day) as well as the 200 day,  and edging dangerously back towards the price level at which an intervention from the Bank of Japan will become almost inevitable once again. With this level now firmly established at USD85.00, any potential move backwards towards this price point will see the BOJ step in to ensure that any further strength in the Japanese yen is snuffed out very quickly.  However, it is interesting to note that any intervention to date has been short lived, with the move higher petering out within a few weeks, indicating once again that whilst no central bank can fight the market on its own, the BOJ’s willingness to allow the Yen to weaken had more to do with the fact that the Nikkei has been falling thereby encouraging foreign investment.  However, with the technical picture looking bearish as the 9 day moving average moves below the 40 day average, expect further moves lower in the short term (especially if the Nikkei continues to decline), with the prospect of a sudden and sharp move higher as we move into the high 80′s price points and lower.

All the fundamental news for Japan has centred on the BOJ meeting at which rates were kept on hold and the only change was the Bank’s comments that higher oil prices would have an effect on Japan’s deflation problems.   Meanwhile markets are waiting for the FOMC statement this afternoon as well as Obama’s State of the Union Address & Geithner’s appearance before Congress to explain the AIG bailout.

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Dollar vs. Yen Chart 4 Dec 2009

The dollar yen chart reacted in typical fashion last week as the Bank of Japan interevened in the currency markets once again, once the currency approached and then touched the 85 trigger resulting in the BOJ taking some positive action.  To regular currency traders such as myself, intervention has been on the cards and came as the dollar yen touched a fourteen year low.  Last week’s action was signalled by the Minister of National Strategy, Naoto Kan, who said that “the BOJ and and Government would act together to deal with the rising yen, and that they would consider all options on what action to take”.  It was clear from last week’s price action that they have already moved to prevent any further strengthening of the Japanese yen, with dramatic results!!  The fear, of course, from the authorities is that a strong yen will will once again hurt their export market and plunge the country back into a fresh period of deflation, from which it has only just emerged. From a speculator’s perspective the move was widely expected (myself included) which only added to the upwards momentum when intervention duly arrived, and help to power the currency pair back into safer waters as far as the BOJ are concerned, breaking well above all three moving averages and clearing the 90 price handle to boot! All in all, a good week’s work for the Bank of Japan which will now sit back and wait to see whether their intervention has provided sufficient momentum for the currency pair to continue higher this week and break through the strong level of potential resistance now in place in the 89 to 92 price region, with a move through here signalling a strong move higher in the medium term – perhaps aided even further by the BOJ.

The only items of fundamental news for this pair are in the US with a speech from Ben Bernanke and the Consumer Credit data – both of which are covered on the main eurodollar site.

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Support & Resistance for Dollar Yen :

S1:  88.75    R1:  91.53

S2:  86.98    R2:  92.54

S3:  85.97   R3:  94.31

Dollar vs. Yen Chart 26 Nov 2009

The dollar yen chart is now at 14 year low as traders & investors piled into the Yen on a tumultous day on the currency markets.   The dramatic rise in the Yen has prompted Hirohisa Fujii, Japan’s finance minister,  to say that ” he was watching forex market moves very closely and that the country could take appropriate steps if moves were ”abnormal”, – these comments have helped to pare some of the yen’s gains but with 87 price handle having broken then 85 could beckon (BOJ notwithstanding).

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Support & Resistance for the Dollar Yen Chart :

S1:  86.87   R1:  88.22

S2:  86.40   R2:  89.10

S3:  85.52    R3:  89.57

Dollar vs Yen Chart 23 Nov 2009

Another day of indecision and uncertainty on the dollar yen chart, which ended the trading session with a repeat of Friday as a smalldoji cross candle, as the currency pair trade in a very tight range. As outlined in last week’s currency market commentary for this pair, the 88usd to yen price level is key to the short term direction for the dollar yen, as it is at this level that we saw some intervention from the Bank of Japan last time around, a pattern we may see repeated as the yen continues to strengthen against the US dollar. As always the number one priority for the BOJ  is the Japanese  export market, and should it perceive that the downwards trend for the pair is likely to damage any recovery from the recent recession, then it will step in and take action to support the Japanese yen. With all three moving averages now weighing heavily on the pair the bearish sentiment remains firmly in place for the time being, and therefore any further downwards momentum is likely to trigger the BOJ into action so we can expect to see a bounce once again in due course. Longer term of course any recovery in the pair will require considerable momentum to breach the deep and substantial resistance areas now sitting above, with the first of these being in the 91 to 92 price level.

Following yesterday’s national holiday in Japan this morning say the release of the BOJ November report in which the Bank expected the economy to pick up over the next few months but warned that it was still weak and fragile suggesting that it may slow down once the effect of the stimulus measures have run out when the new fiscal year starts in April.   Meanwhile in the US the markets will be considering the Preliminary GDP figures due for release at 14.30 GMT and later the CB ConsumerConfidence data which is forecast at 47.6, slightly down from previous.

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Support & Resistance for the Dollar Yen Chart :

S1:  89.27   R1:  89.88

S2:  88.62   R2:  89.84

S3:  88.66   R3:  90.49