Risk Adverse Possibilities Rising for Yen

However, there are reasons to believe the Yen could get stronger because of risk adverse situations arising in the coming days.

Precarious Sentiment and Reasons to be Cautious

Forex proved relatively range bound the first three days of trading this week. Precarious sentiment in global equities, the intrigue surrounding international trade and lingering concerns about the direction of central banks have triggered plenty of reasons to be cautious.

The Yen has been a prime example of this consolidation. However, the Japanese currency which has been testing weaker realms short-term versus the U.S Dollar – has not significantly challenged resistance above 107.20 since early March, and support for the Yen appears to be around 105.50.

Tight Range Seen but a Breakout is Expected

The rather tight range produced early this week could produce a breakout to occur over these next two days, as investors prepare and react to Friday’s coming Average Cash Earnings from Japan and then Average Hourly Earnings from the States.

Any surprises via inflation data will spur on volatility, and there is solid chance equity on the Nikkei Index and Wall Street will generate more fireworks. Speculators may be tempted to look for the U.S Dollar to be sold against the Yen in the coming days on the belief risk adverse sentiment will rise in Asia.

In the short term, we believe the Yen could be positive. The mid-term and Long term we are unbiased.

Yaron Mazor is a senior analyst at SuperTraderTV.

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