This text is from blog famous currency strategist Joel Kruger .
THE INCREDIBLE SHRINKING YEN – So far, the week has been mostly quiet, with markets deferring to some consolidation. The one exception of course, has been the Yen, which continues to extend broad based declines. A new government, with a mandate of aggressive monetary easing and fiscal stimulus has been the primary driver of the sell-off, while some longer-term cyclical studies have also been warning of this Yen decline for some time.
See daily forex technical analysis vide made by Joel:
IGNORE DAILY TECHNICALS – Short-term, many traders might be looking for some corrective Yen buying, with the latest moves highly overextended. But the reality is that the Yen could very well continue to show additional weakness into year end. My feeling is that we still could see a move in USD/JPY into the 88.00 area before any legitimate pullback.
KEY LEVELS TO WATCH – Elsewhere, it is probably best to just keep an eye on EUR/USD price action. A daily close above 1.3250 would likely cancel hopes for an aggressive US Dollar rally into year end, while back under 1.3200 will keep the USD rally prospects intact. Finally, for those of you focused on AUD/USD, next key support comes in at 1.0285, and a break below would be required to open a fresh downside extension towards parity.
