Filed Under:
Forex pairs in this Article » USD/JPY (Barcelona) - Recent pricing action has caused the yen to wane against its American counterpart to start off the trading week. Earlier the pair breached an options barrier at 89.50, thereby hitting the 89.67 mark shortly after, it's highest since June 2010.

However, "the currency pair could struggle ahead of another reported options barrier at the psychologically key 90.00 level. The confirmation that there's going to be a push for a new (BOJ) governor, that new governor is going to have a mandate of 2% inflation, that plus the fiscal stimulus is a major negative for the yen." noted Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.

Last week, Japan approved a USD $117 billion blockbuster stimulus package, the biggest spending boost since the financial crisis, to try and support the economy. Rob Ryan, strategist for RBS in Singapore, said "the dollar could retreat against the yen after the BOJ's policy meeting next week, if its policy decision is regarded as a disappointment. The positioning is pretty stretched at this stage," Ryan stated, adding expectations for the BOJ meeting were sky high.

Over the weekend, Japanese Prime Minister Abe insisted that any new inflation target must be accompanied by a pledge to hit it over the medium-term (not the long-term). "The 90.00 level could present some psychological resistance, though our technical strategists see scope for an eventual move up towards 94.14." notes Research Analyst Gareth Berry at UBS.

Later on Monday, investors will turn their focus to a speech by U.S. Federal Reserve Chairman Ben Bernanke for any hints on how long the Fed's asset-buying program will last.
comments powered by Disqus