Tuesday, August 2, 2011

Bank of Tokyo MUFJ: USD/JPY may renew minimums

Analysts at Bank of Tokyo Mitsubishi UFJ note that the greenback may renew historical minimums versus Japanese yen. In their view, Japan’s Ministry of Finance is reluctant to intervene at the moment.

The specialists underline that Japanese retail investors are positioned for a weakening yen, with lots of stops just below the 76 area. If US credit rating is reduced, a sudden surge of yen could force these positions to liquidate and push US dollar to break the previous record low of 76.25.

If yen breaks below the record minimum at 76.25, the trade will become extremely volatile and the MOF will buy USD/JPY.

Currency strategists at Rabobank claim that on the upside USD/JPY will face resistance at 77.67 and 78.00.

daily usdjpy 14-08

Chart. Daily USD/JPY

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