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Ideas For Currency Trading This Week

Yen is expected to weaken in near term

Yen is definitely overvalued recently due to the Euro Zone’s turmoil. However, further appreciation of the currency against its peers is unlikely due to the following reasons:
Central banks around the world have been doing their best to offer “hopes”. Yen’s value is tough to appreciate in such an environment
The Bank of Japan (BOJ) is unlikely to leave the currency to appreciate if turmoil spurs the demand. I remain my view that the USDJPY at 78 is the bottom line
Recently I see more Japanese Merger and Acquisition (M&A) cases, especially on acquiring overseas firms

On the technical side, the USDJPY has reached the key support level at 78.15 and the downside risk would be Fed’s easing risk. The first resistance is at 78.85 and the second resistance at 79.35.Click the image to enlarge

For the EURJPY, it is also supported well above the 98.30 and the second support is at 97.95. The first resistance is at 98.80 while the second resistance at 99.00.Click the image to enlarge