USD JPY Breaking Out to Upside

The USD JPY is trading sharply higher, strengthened bygreater demand for risky assets and on speculation that the next prime ministerwill favor a weaker currency.

The USD JPY is trading sharply higher, strengthened bygreater demand for risky assets and on speculation that the next prime ministerwill favor a weaker currency.

The Japanese Yen began to weaken Wednesday following theresignation of Japanese Prime Minister Yukio Hatoyama. Traders are worried that the economy willweaken further during the election process at a time when China’s economy is slowing and Europecontinues to struggle. In addition, speculators are selling the currencybecause they believe the next prime minister will be Naoto Kanwho favors a weaker currency.

Look for upside pressure to continue to drive the JuneJapanese Yen higher as long as it remains over the .618 retracement level at 92.41.A failure to hold this level could mean another test of 91.61.

The EUR USD continues to remain inside of a tight rangeindicating impending volatility. Watch for a change in trend and anacceleration to the upside on a trade through 1.2453. A break through the lowof the week at 1.2110 is likely to attract more hedge fund selling pressure. Eitherway, this market seems to be set up for a major move, but seems to be waitingfor fresh news to act as the catalyst.

The GBP USD rally appears to be running out of steam nowthat the short-covering from earlier in the week has ended. The charts indicatethat there may be a corrective break back to 1.4499 before new buyers step backin.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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