Greece agreement out of the way but saga still ongoing
UK Telegraph highlights some of the risks ahead
Yen emerging as the major story amidst Eurozone mess
USD/JPY breaks back above 80.00 for first time in 6 months
Daily RSI at highest level in over 10 years
The fallout from the latest Greece agreement has been rather uneventful and the Euro remains locked in a multi-session consolidation. Although the development was indeed a positive one, investors are still anticipating more troubles out of the Eurozone over the coming days and weeks. The question on everyone’s mind right now is whether Greece will indeed be able to effectively implement the austerity measures required by the EU and IMF. The UK Telegraph has also dampened things somewhat after pointing out that with Greek elections just around the corner, there is still a good deal of uncertainty that needs to be priced in.
But with all of the attention on the ongoing Eurozone saga, some might be missing the more interesting price action in the market right now, with the Yen taking front and center stage. After months of directionless price action by record highs against the US Dollar, the Yen has finally started to breakout and to the downside for that matter, warning of a major structural shift. The recent moves by the Bank of Japan to increase bond purchases have not been taken lightly, and this is seen as the primary driver for the Yen selling.
Additionally, the impressive bid tone in global equities and the Nikkei in particular is also adding to the Yen depreciation. From here however, we think additional Yen weakness over the short-term could be a tough go, with technical studies so stretched and warning of a short-term correction. USD/JPY has broken back above 80.00, but there are some solid offers between 80.25-80.75 that should cap additional gains from here. It is also worth noting that the daily RSI in USD/JPY is at its highest levels since December 2001 when the market was trading above 130.00.
ECONOMIC CALENDAR
Joel Kruger
Technical Currency Strategist
DailyFX Research Team
http://www.dailyfx.com
