Yen Falls To 6-Month Low, US Dollar Safe Haven Demand Wanes
Benzinga | Nov 25, 2013 02:21PM ET
Iran Agreement
The Japanese yen fell to a six-month low against the US dollar after a historic deal limiting Iran’s nuclear activities was announced on Sunday following five days of talks. News of the accord lifted global stock markets and softened demand for the yen as a safe haven.
The agreement, reached in Geneva between six world powers and Iran, commits Iran to restrain its nuclear program in exchange for an easing of sanctions.
Related: GBP/JPY Near Fresh Multi-Year Highs
In April of 2013, the Bank of Japan announced their large scale bond-buying program aiming to stimulate the Japanese economy and prevent deflation. The program weakened the yen initially. However, the Japanese currency stabilized as concerns over military intervention in Syria and the US debt crisis caused investors to move to the yen as a safe haven.
BOJ's Kuroda Comments
On Monday Bank of Japan Governor Haruhiko Kuroda reaffirmed the central bank's commitment to accommodative monetary policy in order to reach its 2 percent inflation target.
Speaking at the Paris Europlace International Financial Forum in Tokyo, Kuroda said "We expect that inflation target to be reached sometime in late fiscal year 2014 or early fiscal year 2015."
Addressing the option of negative interest rates, he said "Negative short-term interest rates could be possible and (may have been) experimented with in some countries in the past. But that's only to some extent and for quite a short time."
Nikkei Continues Surge
While the yen softened, the Nikkei continued its rise as on Monday nearing a five year high reached in May of this year. A weaker yen aids Japanese exporters, making their products more competitive abroad.
USD/JPY Daily Chart
Looking at the daily USD/JPY chart we can see that price is trading above both the 50 and 200 day simple moving averages. RSI is in overbought territory with a reading of 73. Potential resistance lies above at the former high of 103.69.
BY Dan Blystone
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.