Traded again close to 100 yens after a brief approach to 104 yens, the dollar allows us to put our trading plan to execution.
The majority of international financial flows are organized around the US economy, as shown once again by Ben Bernanke from the FED. In fact, after the FED suggested that a slowdown in asset purchases program might occur in coming months, different stock exchanges around the world fell consequently, as the example of the Nikkei.
As a result, risk aversion comes back and the safe haven status of the Japanese currency is popular once again. Japanese investors repatriate funds to cover their losses, boosting the yen appreciation, inversely correlated with the Japanese index.
Furthermore, Japanese senior officials realized how there saying might impact markets, as the example of Akira Amari, the economy minister.
However, even though the dollar/yen rally is close to an end, the Japanese government as well as the central bank will not take the risk to let their currency go backward; especially in current times in which they stay focused on their inflation aims, despite their robust growth (+3.5% YoY).
Those are the reasons why we stand on our buying pullback position. Those pullbacks might take advantage of new catalysts in coming days, such as the monthly report on U.S. employment on June 7th or the monetary policy decision of the BoJ on the 11th.
On this occasion, the Japanese central bank may clarify its policy with the efficiency of the measures already announced being questioned by some of its members.
Graphically, the trend keeps an ultra-bullish bias on all horizons and we take advantage of a new retracement of the parity below 100 JPY in contact with its 50-day moving average. investors can initiate new buying positions targeting a return toward JPY 103.10 and then JPY 105. However, a more cautious behavior would be required under JPY 98.80.