FXstreet.com (Barcelona) - Yen crosses have been seriously battered during the last two weeks on concerns over slumping Japanese economy, at this point USD/JPY is trading at almost four month highs while EUR/JPY and GBP/JPY are trading at 7-week highs, the trend however, could experience an slight reversal today on profit-taking basis.
Japanese economy continues giving signals of stagnation, industrial production collapsed in January, and consuption continues trending down, nevertheless a correction on yen crosses looks needed after two weeks of continuous rally, and profit-taking could trigger it today as it is Friday and not only end of the week but also February's last workinfg day.
According to The Saxo Bank strategy team, the Yen could get back some ground before continuing dropping, on the light of japanese economic outlook: Asia bucked the trend of recent FX direction, with JPY-related pairs suffering from profit-taking with week- and month-end factors attributed as the cause. Stops were hunted and triggered with abandon, but the view is still that this is only a (much needed) correction and retracement before we continue along the road of JPY weakness. The road ahead still looks treacherous for the JPY on the broader economic considerations and outlook. Other currencies were stable and predominantly range-bound.
So far today, USD/JPY has dropped 100 pips falling from a day high about 98.50 below 98.00 support level and advancing south at 97.50 so far.
GBP/JPY has dropped about 400 pips from 141.80 high on Feb 26 to support level at 138.00 (Feb 25 low) and EUR/JPY has lost around 300 pips so far on its retu4r5n from 126.00 dropping to 123.00 so far.