28 May 2013
EUR/JPY continues to find bids near the 130.00 area
FXstreet.com (Barcelona) - The Euro/Yen continued its decline today, sliding another 58 pips to close at 130.70 but again holding support just above the 130.00 area for a third straight trading day.
According to Marc Chandler, Head Currency Strategist at BBH, “appreciation pressure on the yen may be coming from the unwinding of short yen hedges by equity investors. Many of the foreign investors who have poured almost $80 bln into Japanese equities this year have hedged the currency risk by selling the yen. However, given the slide in Japanese share prices, they may now be over-hedged. They need to buy the yen to reduce the hedge.”
From a technical perspective, the short term moving averages on the daily chart are now in a slightly bearish set up, with price close below both the 9 and 20dma’s. Furthermore, the 9dma is now sloping downward and appears to be attempting a bearish cross beneath the 20dma which could be a sign selling pressure is likely to increase. Initial support sits at 130.00 (low price area of previous 3 days), followed by 127.92 (the 50dma). Initial resistance sits at 130.99 (the 20dma), followed by 131.65 (the 9dma).
According to Marc Chandler, Head Currency Strategist at BBH, “appreciation pressure on the yen may be coming from the unwinding of short yen hedges by equity investors. Many of the foreign investors who have poured almost $80 bln into Japanese equities this year have hedged the currency risk by selling the yen. However, given the slide in Japanese share prices, they may now be over-hedged. They need to buy the yen to reduce the hedge.”
From a technical perspective, the short term moving averages on the daily chart are now in a slightly bearish set up, with price close below both the 9 and 20dma’s. Furthermore, the 9dma is now sloping downward and appears to be attempting a bearish cross beneath the 20dma which could be a sign selling pressure is likely to increase. Initial support sits at 130.00 (low price area of previous 3 days), followed by 127.92 (the 50dma). Initial resistance sits at 130.99 (the 20dma), followed by 131.65 (the 9dma).