How Far Can USD/JPY Fall?

The U.S. dollar fell to a 7 month low against the Japanese Yen this morning following another barrage of weak economic data. Consumer prices fell, foreign inflows decreased and the UMich consumer confidence survey dropped to the lowest level since August 2009. On FX360.com, I talked incessantly in my daily report about how the data today was going to be weak and yesterday, I said USD/JPY was going to fall to at least 87. However now that it has broken below that point, the burning question on everyone’s minds is How Much Further Can it Fall?

My updated target is at least 85.00 – The currency pair’s 14 year low. When USD/JPY reaches that point, expect Bank of Japan officials to cry uncle and attempt to talk down the Yen (and up the dollar). That will most likely create some 2 way risk in USD/JPY and stem the currency’s slide. Yesterday, Shirakawa already warned that they are watching USD/JPY closely.

Enjoy the chart, enjoy the trade.

7 Comments

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    AZIZUS INTERNATIONAL BUREAU DE CHANGE LIMITED

    Reply
  2. Hi Kathy,

    Japan seems to be very quiet with this new PM. And conflicting views on China growth and risk to growth is confusing me. I think the USD/JPY testing these levels might have something to do with this. Would political instability in Japan cause the yen to lose its status as a safe haven currency eventually? What are your views on this?

    Reply
  3. @ JPY Forex Fan:
    What did they say? I can’t find anything – and I thought that today was a bank holiday in Japan (The Nikkei was closed today).

    Reply
  4. Cheers.

    Kathy, what do you think of the recent JGB vs UST movement versus USD/JPY? I find their recent correlation a bit awkward. What are the key things you would be looking at here?

    Reply

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