By Forex Signs, Inc.
The pair AUDJPY has formed a minor bearish channel. As of this writing price is consolidating between immediate support level 82.949 and immediate resistance level 83.186, but price is testing the immediate support. If price makes a break above the immediate resistance level a continuation of the bullish trend may happen, testing 83.299. A break above 83.299 will confirm the bullish trend and buy bias is possible in the medium term. A sell bias is possible if price breaks the immediate support, testing 82.848. A break below 82.848 level and the bottom line of the major bullish channel may signal a bearish reversal. RSI (14) in the H4 chart shows price is within neutral range, suggesting a bearish trend can sustain its momentum and confirm the sell bias.
Japan Doing Extra Measures to Boost Economy
The Japanese yen has a big chance of appreciating today against euro as Japan is already doing extra measures to improve their economy. Bank of Japan purchased 14.2 billion yen worth of exchange-traded funds yesterday as part of efforts to facilitate corporate financing and help boost economy. Aside from that, another asset to Japan has come to light as Japanese Airlines and American Airlines successfully closed a deal that will transpire come 2011.
Digging further on ETF purchases, it is the first time that the central bank ventured to this kind of investment. ETFs are riskier in terms of price volatility than government bonds and other financial products that the BOJ normally buys. Meanwhile, their recent tie up with American Airlines can help improve their trade in the United States. Come January 2011, the JFK will already have direct flight going to Tokyo’s Haneda airport. This project can boost more investors in Japan.
However, one significant problem can transpire. Since Japan is trying hard to weaken their currency, their measures on boosting economy might do that. Investment in yen can take long term as it is incontrollable to appreciate once economy is doing great.
Anyhow, for the meantime, the yen can look at a win against euro but only with small volatility. Aside from the newly acquired assets of Japan, the currency can take advantage from euro’s critical condition in the market.
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