Japanese Yen rebounds as risks for global growth weigh in
IMF’s global economic growth forecast was cut for the third time this year down to 3.3% from 3.4% previously. The cut in economic growth forecast is mainly due to weakening economic activity in the core euro zone countries, Japan and big emerging markets. This and the fact that yesterday’s released German industrial output data came out weaker than expected weighed in markets driving investors out of risky assets towards safe-haven currencies and Treasuries.
USD/JPY was driven lower below 108 this morning, before returning to trade during the European market opening at 108.20. Japanese Yen has rallied since the first day of the month down from a 6-year high 110.07 to this morning lows at 107.75, a mere 2.10% for this month. If the downtrend in the pair continues, it is very possible that we see a trend reversal from the established uptrend since mid August. In such a case the initial target for the corrective move would be at 106.79 – 38.20% retracement.
EUR/JPY was sharply lower yesterday, as the general Yen rally was backed by concerns for the Eurozone economic activity. The pair traded as low as 136.55 before retreating back towards 137 this morning. Technical support levels for the pair can be found down in 135.70- 135.80 area.
EUR/USD was supported above 1.26 yesterday and it even tried to challenge this month’s highs up towards 1.2680 levels without success though. Therefore support levels remain intact just below 1.26 and resistance levels just above 1.2680. Today’s trading for the popular pair is expected to be fairly quite, ahead of the FOMC minutes released this afternoon.
Traders will watch very closely tonight’s FOMC minutes release for any indication on the time and pace of U.S. interest rates hike. The announcement will be made at 18:00 GMT.
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