The yen is in demand across the board and it’s starting to drag down the accompanying majors.
GBP/JPY has taken a quick 20 pip fall to 173.39 and is being held up by the 100 dma at 173.35. The 168 lows coincided with a former S&R level at 168.30 and the old 38.2 fib from the 2007 hi/lo at 168.11. The 55 dma is pretty close to at 173.52.
GBP/JPY Daily chart 27 10 2014
EUR/JPY continues to follow the Dec 2013 downtrend and also has resistance joining it via the 55 & 100 dma’s at 137.46 and 137.64.
EUR/JPY Daily chart 27 10 2014
There seems to be a fair few factors mounting in favour of the yen. The US are still mentioning the strength of the dollar and the tone towards Abe and his government is continuing to sour, just as the economy looks to be softening and inflation falls. In the markets eyes Japan is still being given the benefit of the doubt that they can pull themselves out of the mess but that’s not going to last forever. A big downgrade to their economic forecasts this week could spell big trouble in yen currencies.
