USD/JPY seemed to be overbought the last week, and the same is anticipated to rebound soon to the neutral position. Seeing from where this pair is coming, and the huge convention, the same can reach 89, and it is not something far from practicality.
The falling of the dollar in the U.S., and the advancing economic data from Japan has led to a trader’s pull back on the falling yen and will lead to its rebound even though the speculations call for a weakened currency, as per promise made by government in Japan.
Government are not always the primary controller for currency prices and this could be said seeing the dollar-yen fall to 80, just when the government committed the same never falling below 100.
The prime minister in Japan is expected to fire his third round this week to enhance the competitiveness of the largest economy on the globe. The release of flexible labor policies is on charts, which will tackle more deep-rooted conflicts; like relaxing the immigration laws or starting the farm sector in this country.
The policies released by the Japanese prime minister have already led to the weakening of the yen by 25% against the dollar in U.S., since the time he initiated his talks about fundamental change, which is from the time when mid November.
Japan not following the structural reforms, seems highly ruled out and this will further weaken the yen. Authorities in Japan, wish the currency to go beyond 100. Some analysts and officials however believe that the weakening of the U.S. dollar, which occurred last week, will prove to be the driving force in pushing the yen down further.
The second half of 2013 is believed to bring about a synchronized growth globally, which may cause a boom then. This clearly indicates an increase in the confidence in the U.S., ironically meaning selling the USD.
Last Tuesday the U.S. dollar index reached 84.36, trading at its highest level in three years as seen on May 23 at 84.49.