By TraderVox.com
Tradervox (Dublin) – Some analysts are very skeptical about the continued decline of the yen against the dollar, and they are indication that a correction might be on the horizon. The current downside trend of the yen was sparked by the positive US job market report and the favorable retail sales report. In addition, the situation was compounded by the Fed’s indication that it would not make another round of bond buying; this situation has been aggravated by the BOJ governor’s comments that another round of asset purchases.
Some analysts have warned that the overbought dollar/yen market should not fool investors into thinking that the pair has taken a longer-longer term structural shift. However, there are risks that the pair will push towards 100.00 level in the months to come, but it will pullback to 80.00-82.00, which is expected to be the pair’s long-term base. There are those analysts who claim that the pair has had a one way price action, which is not healthy, and the market should trend in an orderly manner.
The USDJPY pair was at 83.79 at 9:34 GMT after it had gone up to 84.14 earlier in the day. The different stances taken by the two countries’ central banks have elicited this surge, but this is not supported by fundamental and will eventually fall back to 80.00-82.00 level. In the coming months, the dollar might increase to 100.00 level as Japan deals with the effects of the eurozone crisis effects.
Positive economic reports in the US have pushed the currencies stronger against most major currencies. The dollar has surged against the sterling pound which has been hit by the unexpected increase in the unemployment claims. The country has also reported some negative economic reports despite the strong measures taken by the BOE to avert a possible economic crisis. The AAA status of the country is also under threat if the current crisis continues.
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