Yen Losses Ground as Risk on Rally Takes Hold


The USD/JPY strengthened as China and other stock markets rallied. The yen has re-established its historical inverse correlation with equity markets recently and as the safe haven play when chaos hits the capital markets.

The USD/JPY currency pair made a two-day high at 122.03, bringing the 50-day moving average at 122.34 into view. EUR/JPY sprang to a four-day peak of 133.81. Stocks markets in China rallied strongly for a second day, with the Shanghai Comp gaining nearly 4.5%, adding to Thursday’s near 6% advance as yet further stabilization measures were implemented. Japan’s Nikkei was showing a moderate loss, weighed by Fast Retailing, which accounts for about 10% of the index, following an earnings report.

In economic news Japanese producer prices dropped 2.4% month over month in June compared to a decline of 2.2% in May. The focus on the currency markets falls squarely on issues related to both Greece and China which left little interest in Japanese market fundamentals.

The currency pair tested the 10-day moving average at 123, but was unable to break this line in the sand. Support is seen down near Wednesday’s lows at 121. Momentum has turned positive with the MACD (moving average convergence divergence) index generating a buy signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crossing above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

The post Yen Losses Ground as Risk on Rally Takes Hold appeared first on Forex Circles.

Source:: Yen Losses Ground as Risk on Rally Takes Hold

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