Euro/Yen and Components
The eur/yen peaked at 127.71 on February 6th and has been making lower highs and lower lows (122.24 low today) since then. The eurohaving lost 3.8% of its value versus the Japanese currency in the process. The yen crosses have tracked the euro lower and kept a lid on the dollar/yen. The euro has shed an identical 3.8% against the dollar dropping from 1.3711 on February 1st to its 1.3189 close today in New York.
Since the low in the yen against the dollar on February 11th at 94.46, the Japanese currency has strengthened 1.4% to today's 93.12 New York close. The primary pressure on dollar/yen, operating in spite of the rhetoric of the Japanese government has been the selling of dollar yen in response to the collapse of eur/yen.
Technically the eur/yen, would need to close above the February 15th low, now resistance, at 122.90, for any kind of upward momentum to build. But even a technical break of resistance at 122.90 would be unlikely to prolong an upward move as long as the euro remains burdened by the European recession and speculation for an ECB rate cut. The cross has not been at these elevations for two and a half years.
With the weakening euro keeping downward momentum on the eur/yen, traders are disposed to sell any rallies in the cross. The caveat to the declining yen crosses is the potential intervention of the Bank of Japan to weaken the yen against the dollar. The new Japanese Prime Minister Shinzo Abe has promised to end the deflation that has plagued the Japanese economy on and off for 20 years, through a combination of monetary and fiscal policies that have been taken by the currency markets to mean a yet weaker yen.
Since the landslide election of Abe on December 16th the yen has lost 11.7% versus the dollar; since the September 2012 high at 77.12 it has devalued 20.6% against the dollar.
Resistance at 122.90 and 124.00
Support at 122.00 and 121.00.
14 day 125.19
55 day 117.99
Chief Market Strategist