Forex Flash: Watch for a break in market psychology – BBH
FXstreet.com (Barcelona) - The analysts at Brown Brothers Harriman suspect that a break in market psychology as taken place and that dealers will be looking to buy the dollar on pullback against the Yen whereas previously they were more inclined to sell dollar bounces.
They see support for USD now just below 81.00 and note that it has not closed two days more than two standard deviations about its 20-day moving average (top of the Bollinger band) since last November, after massive (~$100 bln on 31 October 2011) intervention. It will do again if it finishes the week above 81.00.
On the upside, the 81.50 area is thought to contain option barriers. Lastly, the anticipation of easier monetary policy and a weaker Yen is a net positive for Japanese stocks. In fact, in a week Yen environment, they believe that foreign fund managers may want to consider switching from JGBs, towards Japanese stocks. They note that foreign purchases of Japanese shares has fallen about two thirds this year to about $2.72bln.
They see support for USD now just below 81.00 and note that it has not closed two days more than two standard deviations about its 20-day moving average (top of the Bollinger band) since last November, after massive (~$100 bln on 31 October 2011) intervention. It will do again if it finishes the week above 81.00.
On the upside, the 81.50 area is thought to contain option barriers. Lastly, the anticipation of easier monetary policy and a weaker Yen is a net positive for Japanese stocks. In fact, in a week Yen environment, they believe that foreign fund managers may want to consider switching from JGBs, towards Japanese stocks. They note that foreign purchases of Japanese shares has fallen about two thirds this year to about $2.72bln.
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