FXstreet.com (Barcelona) - The Japanese yen hit highs versus all its major competitors early in today's Asian session as concerns over Obama's plans to regulate US banks hurt the dollar and the euro continues to suffer from ongoing worries over the Greek debt dilemma. Experts, however, say that the dollar will win out over the yen as the strongest safe haven as risk appetite dries up.
The dollar, euro and pound all followed the same pattern of falling to lows early in Asia to later regain some lost ground as European trading got under way.
The USD/JPY fell to a 4-week low at 89.77 early in today's Asian trading before finding support in this area and then rebounding slightly to mark an daily high of 90.53. Today's early drop comes on the heels of yesterday's 85 pip free-fall after Obama's speech on proposed bank regulations. The pair is currently trading at 90.35, having found resistance at 90.55.
The EUR/JPY opened the Asian session by briefly dipping to set a 9-month low at 126.55. The pair then pulled back to find support near 126.83 before spiking upwards to set a daily high at 126.15. At the moment of writing, one euro buys 127.77 yen.
The GBP/JPY extended yesterday's 229 pip drop early in today's Asian session to establish a monthly low at 145.40 before trading sideways and later jumping up to a daily high at 147.22. The pair is currently trading at 145.83.
Dollar as long-term safe haven
Daily FX analyst John Kicklighter says that although the yen has been on the rise, it is important to take an accurate assessment of its fundamental strength, above all against the dollar, and argues that the yen is far from a safe haven.
The future [for Japan] shows a struggle to establish an economic recovery, ongoing credit troubles and an extension of crippling deflation, Kicklighter says. When conditions stabilize, the yen will once again fall into the category of funding currency. And, when US market rates finally perk up; even USDJPY will climb on carry.
Hans Nilsson, of CMS Forex, points to the USD/JPY's bullish outlook even in the short term.
There is support in the 90 area, Nilsson argues. If this support holds, it will create a potential inverted head-and-shoulder and increase a chance of penetrating the long-term downtrend and reversing the two-and-a-half-year decline. A penetration of the long-term diagonal resistance in the 93-94 area will lead to a very bullish USD/JPY outlook.