Time For Yen Bulls To Back Off?

The Japanese Yen has been strengthening against the world’s other currencies for the past few months. For the time being, however, this trend seems to have reversed. The charts below tell the story.

CHF/JPY - Note the recent strong uptrend.

EUR/JPY - Ascending triangle formation in the works.

USD/JPY - Moving averages turning upwards, and price trading above moving averages.

Personally I’ve been in and out of short USD/JPY since 101.30; I just closed my most recent USD/JPY short position, as I think a short-term reversal of sorts may emerge. Still, though, I think the long-term trend of yen strength will continue. Accordingly, I’ll look to re-enter on a break below 88.00, or possibly 85.00.

Yen traders may also find the recent comments of Akio Mikuni, president of credit ratings agency Mikuni & Co., to be of interest. Mikuni said:

Japan’s economic model has been dependent on external demand since the Meiji Period that began in 1868. The model where the U.S. relies on overseas borrowing to fuel its property market is over. A strong yen will spur Japanese domestic spending and reduce import prices, thereby increasing purchasing power.

Mikuni said the USD/JPY could fall to 50 or 60 from its current price of just above 90 unless Japan takes “drastic measures” to help bail out the US economy.

Disclosure: No position.

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