USDJPY Hits New Highs - 12.2.2013

The Japanese yen fell on Monday. Pair USDJPY reached new local highs after breaking the mark 94.00 and touching 94.21, the highest since May 2010. Pair EURJPY also climbed higher yesterday, approaching recent February’s highs (127.69). At the moment the pair is trading slightly above 126.00. According to informational agencies yesterday a US government representative expressed support to the Japanese policy. As Japan’s Finance Minister Taro Aso said, the economic policy is aimed at deflation beating. This week, on Thursday and Friday, the Bank of Japan will hold its policy meeting. Markets do not expect severe easing steps from the Bank this month, but do expect that measures will follow current Bank’s governor resignation in March. The Australian dollar remains under pressure against the US counterpart. In the morning the currency pair dropped to a new 3.5-month low – 1.0239. An improve shown in Australia’s business confidence repot issued today failed to provide necessary support to the nation’s currency. From the technical point of view the pair is still having potential to move lower in the short term. However we consider that medium-term dynamics will turn positive for the aussie. The pair EURUSD maintains a narrow range, above support level 1.3350 and mainly below resistance level 1.3400. On Monday France’s politicians underlined once again that common measures must be taken to prevent the single currency from excessive strengthening. However according to Eurogroup officials the currency value must be determined by the market. The Group of 20 will hold meetings on Friday and Saturday and may issue common statement regarding the currency issue.