The yen strengthened from a seven-year low as trading patterns signaled the Japanese currency’s drop beyond 115 per dollar has been excessive.
The yen’s 14-day relative strength index sank to 20 at the start of the week, and remains below the 30 level that’s deemed by some traders to indicate that an asset is oversold. The dollar headed for a third weekly advance before a U.S. report tomorrow that economists say will show employers hired workers at a faster pace in October than this year’s average. The euro strengthened against the dollar before the European Central Bank sets policy today.
“It’s not surprising that we pivot around these key big-figure levels like 115,” Mitul Kotecha, head of Asia-Pacific foreign-exchange strategy at Barclays Plc in Singapore, said in reference to the dollar-yen rate. “These are levels that might trigger a lot of profit taking or options barriers.”
Source: Bloomberg (06 Nov 2014)
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