US Dollar / Japanese Yen (USD/JPY) : A sustainable rebound ?
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02/15/2012 | 10:34am
Opinion : Bullish above 82 JPY
Target price : 90 JPY Potential: 16.14%
Stop loss: 78 JPY
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For almost two years, the Japanese currency has been a major safe asset for financial investors despite the economic fundamentals of the archipel. In fact, the Japanese currency has continued to benefit from its safety image in an uncertain global environment marked by the European debt crisis.
As we enter 2012, the yen begins to seriously suffer from poor Japanese economic indicators such as GDP fell by 0.6% in the fourth quarter or the deficit of 2,500 billion yen for the year 2011. Meanwhile, the publication of optimistic global economic indicators and easing the European crisis encourage financial operators to move away from safe assets in favor of riskier assets.
Finally, the Bank of Japan announced once again a surprise easing of monetary policy by an increase in its program of asset purchases. The Japanese bank has also followed the example of the FED, setting a target of short-term inflation at 1%. These measures are made to support an economy hurt by deflation and the strong yen.
All these factors should continue to support parity in the long run, especially since the majority of technical indicators are turned upward against the yen in recent days.
Technically, in daily data, the upward trend of parity continues in the direction of 80 JPY, the key threshold. The weekly level of 76 has played its part and allowed a rebound which could be the beginning of a long-term uptrend much more sustainable.
Thus, buyers can take short term profits at the approach of key weekly threshold of 80 JPY. In contrast, buyers, whose investmenthorizon is long term, can once again position themselves to the purchase of parity on the crossing of the 81/82 JPY which should allow the release of a new upside potential in the direction of 85 and 90 JPY.
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Rodolphe Steffan
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