The yen is declining against the dollar in today’s session, given the rise in risk appetite and the oil price hike. It’s important to highlight that the market is expectant about the FOMC’s meeting at the 24th of June and about the possible announcements made afterward.
Good question. During the “good times”, money is moving abroad seeking better returns. When risk aversion returns it moves back home and back to safety. In the case of the USD/JPY the JPY will be getting stronger, not necessarily because traders think the Japanese economy is outshining the US economy, but because any borrowing of JPY to fund investments in USD will be unwound trying to return those borrowed funds.
The dollar is trending higher against the yen, trading at 95.227. Pay attention to the meeting between Geithner, Bernanke and the Chinese government representatives. Among the main themes is the dollar’s weakness and China’s wish to seek an alternative as a global reference reserve currency.
If the pair keeps trending higher, the next resistances are found at 95.30 and 95.50. If the pair weakens, the nearest supports are found at 95.00 and 94.60 yens per dollar.
PS: great response, when I first started trading I had the same doubt about saves heavens and risk aversion after announcements and your answer is very good.