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Lambert: Dangerous depreciation for the JPY

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The US Federal Reserve’s confidence in the recovering US economy ignited a rally in USD against a wide swathe of currencies. The Fed dismissed the market’s recent volatility and the growth challenges facing Europe, instead choosing to focus on the revitalization of the US labour market. Clive Lambert from FuturesTechs has been monitoring the USDJPY cross and believes the dollar will continue to strengthen.

The yen had stabilized, range bound around the 108.00 figure, until the Fed’s announcement. Haruhiko Kuroda, Governor of the Bank of Japan, encouraged the yen’s depreciation and the positive impacts of a weaker currency for exporters. The debate surrounding an ideal trading range for USDJPY varies between USD 95 – USD 110, with any move above USD 110.00 creating unease in the domestic market according to Governor Kuroda. Unfortunately for the yen, the positive outlook struck by the Fed means the dollar could continue to trade at the higher end of that range.

Clive is looking to buy USDJPY at 108.50 – USD 108.60, the halfway point of the large green candle formation currently posted on the daily chart. He is targeting a move higher towards: USD 109.60, USD 110.00, and USD 110.10. A stop can be placed below 108.20.

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