dollar, yen

Wednesday saw finally a strong performance of the yen after long time when the currency of the “Land of teh Rising Sun” sufferred from its actual expansionary monetary policy.

Bank of Japan’s (BoJ) Governor Haruhiko Kuroda spoke on the Semiannual Report on Currency and Monetary Control before the Committee on Financial Affairs, House of Representatives, on June 10, 2015.

Besides largely expected quotes like improvement in business fixed investment seen, households, employment experienced better conditions, income situation is getting better and the  price target seems to be reached during first half of the next year, the major topic remained in focus – the exchange rate of the Japanese currency.

Kuroda stated that yen business remains weak from the point of view of a real effective exchange rate basis, thus boosting traders to enjoy bullish rally during the start of the Wednesday session. Nevertheless, according to Kuroda’s speech, Boj is not intending to adjust its actual monetary policy and influence yen, as the inflation target remains the major point to be reached.

Yen is being influenced naturally by its US counterpart as well, being in a bullish trend from a long-term perspective, albeit experiencing some shorter correction on news (like Q1 data disappointment or latest rumours about US President Barack Obama stating that strong dollar is hurting the US economy).

In such environment, we can expet the yen to be held in the territory above ¥120 for a longer time as US monetary policy tightening is about to come later this year ur during the next year, while Japan remains steayd in its expansionary monetary policy.

From the technical point of view, we can see our previously mentioned support at ¥122.875 already reached now and the currency pair slowing down at this level. Nevertheless, if yen continues further, traders should set the target to ¥121.914 or later to ¥121.369 if there comes no news on the US dollar, but we don’t expect the currency to strengthen today that drastically.

Dollar correction could drag down the yen to ¥124.220 resistance level, appropriate for a take profit pointor in case of extraordinarily positive data for the greenback even to ¥125.650.

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