The yen is up this morning, particularly against the euro. Following the collapse of German coalition talks, EUR/JPY is at its lowest level since mid-September. So far, the yen has failed to strengthen against the dollar and USD/JPY remains flat this morning. If the yen continues to strengthen against the euro, at some point it will rally against the US dollar as well. The US dollar is likely to remain subdued thanks to the upcoming Senate vote. As both the euro and the US dollar sell off on respective political concerns, the yen is likely to gain in relative terms. Our short-term outlook on the yen is bullish.
USD/JPY is currently trading above 112.0. Looking at the euro vs. the yen, EUR/JPY is down and is currently trading above 131.60.
This is a fairly light week for economic data releases relating to the yen. On Monday we’ll see trade balances, exports and imports. On Tuesday, we’ll see the All Industry Activity Index. Finally on Friday we’ll see cross-border stock and bond investments. Last week, GDP growth figures met expectations.
As the yen strengthens in relative terms against major currencies, we are upgrading the yen to bullish in the short-term. Note that the currency is looking overbought in the short-term, based on technical indicators on the daily chart.
As political developments overseas strengthen the yen, we are upgrading the yen to bullish. Looking at the yen on a weekly chart, the currency is trading within normal conditions. This is based on various technical indicators when looking at a weekly chart.