Yen Weakness. A look at technicals and fundamentals

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The USD/JPY recently broke the long waited psychological level of 100. The trend looks like it is going to continue as no sign of weakness is visible technically. In fact, a new fresh high of 101.21 was hit this morning. Since the yen broke the 80 level in November, the daily chart has not looked back and has not shown any sign of weakness or reversal. The price has remained above the 200 day moving average since then.

Fundamentally, the Bank of Japan announced in April that it wants to further ease its monetary policy to contain the deflationary conditions that have hindered Japan’s economic growth. Monetary easing has helped this deflationary spiral and has also helped increase exports. A boost in the dollar has also contributed to keeping the yen weak as signs of strength in the U.S. economy are becoming more apparent with the unemployment rate currently being at a four year low of 7.5% and non farm payrolls exceeding expectations in April with 165’000 new jobs created.