FX Headlines: Dollar, Yen Slip as Risk Aversion Fizzles Amid Cooling Worries about Japan's Nuclear Situation
• Inflation Pressures Build on Surge in Energy, Food - CNBC
• Setback in Japan’s Reactor Fight - WSJ
• Fed Leaves Policy Unchanged Amid Global Shocks - WSJ
• U.S. Housing Starts Fell in February to Lowest Since April 2009 - Bloomberg
• Bahrain Police Clear Protest Roundabout – Financial Times
USDJPY: The USD/JPY pair continues to remain the most puzzling trade over the past few days, as both good news and bad news alike have helped the Yen appreciate against its American counterpart. The Yen was boosted on investor confidence that Japan’s nuclear situation is in a more controlled state than it was a few days ago, as evidenced by a return to risky Japanese assets. The Nikkei took back 6 percent in today’s session, and U.S. equity market futures pointed towards a lower open. A return to risk aversion will translate into gains for the Greenback, except against the Yen; the USD/JPY pair remains one of our main focuses over the next month given the parallels to the 1995 Kobe earthquake.
Taking a look at price action, key support at the 0.00 Fibo retracement on the September 17 to November 5 move appears to be the next target for the pair after brushing aside the 23.6 Fibo with little regard. has been broken. Now, with the pair is coming off of a test of its range bottom of its descending channel from mid-November, with a break below 80.500 appears to give way to a clean fall through 80.000, and through the 0.00 Fibo. Currently, the USD/JPY pair is sitting just above 81.600 after touching the range bottom at 80.570.
Written by Christopher Vecchio, DailyFX Research.
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