Yen Pairs Weekly Update - March 11/15 close

The terrible and devastating events experienced in Japan after last Friday’s earthquake, the resulting tsunami and on top of this the succesive explosions at Fukushima’s nuclear power plant reflected on its currency with an initial sharp fall that quickly reversed into a heavy buying, which can be explained by speculator’s expectations of future demand from businesses for the japanese Yen due to the massive rebuilding task that lies ahead for the ravaged country. All major currency pairs lost ground steadily and made new lows, and the currency appreciation seems to be continuing for a while, however authorities have already warned against speculative trades and are prepared to take prompt action through intervention of the currency markets if needed.

The Bank of Japan announced on Friday, after the earthquake striking, that it would be working actively in order to provide enough market liquidity and guarantee the stability of financial markets. Last Monday massive amounts of funds were pumped in a bid into the markets to help them stabilise.

In view of the strong influence of fundamentals at the present time, and that my views are purely technical, I would suggest to proceed with much caution with any of these pairs and watch closely the approach of key levels, especially in regard to the USDJPY.

USDJPY

Weekly symmetrical triangle was broken to the downside and is presently trading below the 138.2% Fibonacci extension level on previous swing low, and 20 pips short of reaching that same level on the daily time frame. Key level to watch here is 80.00 as fundamental moves could then trigger a massive yen-selling intervention to stabilise the currency.

EURJPY

The EURJPY made a new low on Monday after a quick bullish reaction move, reaching the 50% Fibonacci retracement on the weekly swing high and confluence of SMA34 and middle line of the Bollinger bands, at 112.45. It reached again a new low yesterday, barely below psychological level 112.00, where it was rejected to the upside for about 150 pips signaling a possible double bottom along with late february lows. It is presently looking to retest this level, and a break down in extension would lead us towards lower Bollinger bands, and moving averages of 100 and 200 days as well as early february lows (111.50/00). A further fall could bring us to 110.50/40 as second bearish target, which represent respectively the daily 138.2% bearish extension on the previous swing high range, and weekly 61.8% Fibonacci retracement. 

GBPJPY

Weekly charts show a slight break of the rising wedge after a bearish week and close at the retest of the broken level, while daily charts show a new low and close between SMA200 and SMA100. Yesterday, the Geppy reached below the 138.2% Fibonacci extension of the previous bearish swing, and looks aimed for a continuation lower. It is presently making another double bottom along with January lows, however given the overall situation I would expect a break towards 128.50 which is the 161.8% extension.