Yen drops after S&P downgrade to Japan

By @ibtimes on

The yen fell against majors after S&P downgraded Japan's credit rating to AA-, three levels below the highest possible rating, clarifying that the government does not have a clear plan to cut debt which is one of the highest among the world developed economies.

The cut is the first since 2003, which raises alarm to other European large economies and the United States.

After the announcement, the yen dropped sharply against majors, where the dollar/yen pair rose to a high of 83.20 compared with the day's opening at 82.18, but it fell from that high to trade at 82.80.

The trading range for today is among the major support at 80.35 and the major resistance at 83.70.

The US dollar remains week as depicted by the dollar index, which tracks the dollar movement versus a basket of major currencies, as it fell to a low of 77.58, while it is currently trading near the day's opening level at 77.70.

The greenback is showing some weakness ahead of the release of important housing, jobless benefits and durable goods reports. Yesterday, the Fed left interest rate unchanged at its historic low between 0.00% and 0.25%, while mentioning that the $600 Billion QE2 announced in November will remain intact as planned.

With regard the euro, it advanced against majors after Trichet said ECB will take all necessary steps to halt price acceleration, ensuring that the current interest rate is appropriate.

Also, European confidence data showed that economic confidence inched down to 106.5 in January from 106.6 in December, yet it remains at three-year high.

Concerning the euro-dollar pair, it is showing slight incline on the daily charts, insisting to close the third week on gains, yet it is fighting to remain above 1.3718, where it is currently trading.

The pair which reordered a high of 1.3756 and a low of 1.3635 today is expected to do a downside correction as it is currently moving in overbought area, according to the Stochastic Oscillator momentum indicator.

The trading range for today is among the major support at 1.3540 and the major resistance at 1.3900.

Finally, the royal pair rebounded on the daily and 4-hour charts after resting upon support at 1.5875 to rise to a high of 1.5961, in the absence of data from the UK.

So far, the pair is trading at 1.5950 while it recorded a low of 1.5878, whereas the trading range for today is among the major support at 1.5730 and the major resistance at 1.6100.

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