Established in 1974
185,800 clients worldwide
Over 15,000 markets

Yen regains some ground in Asia

A strong set of US data drove gains for the US dollar, but this is proving to be short-lived as the greenback is losing ground in Asia.

Yen
Source: Bloomberg

Moves in USD/JPY continue to dictate sentiment in the FX space and, after topping out at ¥118.98 in US trade, the pair have since pulled back below ¥118.00 with losses accelerating in Asian trade. Comments by Finance Minister Aso have suggested he’s surprised by the rapid yen depreciation, which have been pinned as the key driver of the sharp pullback.

However, this is nothing new and we’ve heard Aso make similar comments in the past. Given today is the day when Abe dissolves the lower house, rhetoric is likely to ramp up in coming sessions. As a result, I feel this pullback in the pair is quite timely and presents opportunities for traders who missed out on previous longs.

Weakness in the pair is likely to be used as an opportunity to buy as the election campaign gets underway. The pair had been significantly overbought and the RSI looks like it could dip below 70. A key level to look out for will be ¥115.75 – the point at which the 23.60% retracement of the October-to-November rally kicks in.

 USD/JPY
Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts