The yen hit a record low versus the euro and held near a 4-1/2-year trough against the dollar on Tuesday, pressured by the view that Japanese interest rate rises will be outpaced by those of other central banks.
The yen has fallen across the board since Bank of Japan Governor Toshihiko Fukui said last week he had no preconceived ideas about a future rate rise, dousing expectations of a hike in July. "Carry trade is the main driver of the market," said a senior trader at a Japanese bank.
The euro scaled a record peak against the yen on Monday on expectations for the Bank of Japan to raise interest rates only gradually. The euro extended its gains to hit a record high against the low-yielding yen for the second straight session, getting a boost following Friday's remarks by BOJ Governor Toshihiko Fukui that all but doused fears of a rate rise in July. "The CPI dispelled the market's fears as did Fukui. Such factors are crying out for yen-selling," said a trader at a major Japanese trading house.

The selling point is at 165.65; triggered by double top and the breaking of the trend line and a failure to reach higher than the previous peak of 166.03.

- Previous support is the 1st target taking profit at 165.36 and the break of this
level will reach 23.6% Fibonacci retracement which represent the 2nd target for
taking profit at 165.02

- Previous resistance is the Stop Loss at 166.12

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages lines and breaks of the zero level.
The shorter term moving average is faster than the long term and is pointing downwards.
In order to find the power of the market, we use RSI (Relative Strength Index).
With RSI, we can determine the market is in a downtrend; we therefore find weakness of the market and a bearish signal.
The zero line of the ROC (Rate of Change) is very important to understand the strength of the market and as we see on the graph; it breaks the zero line and moves downwards.
We should always look at the trend line; and in this example it breaks the primary trend.
For the momentum oscillator we have to concentrate at the zero line and the trend of the oscillator. Stochastic oscillator is giving us the strength of the sellers.
William %R shows us a bearish signal.

Most of the indicators show us the weakness of the Euro against the Japanese Yen and the reversal of an up trend that reached the highest rate 166.12

* The following analysis is for information only; Finotec is not responsible for any
decisions or misinterpretations based on the given text.

By Finotec’s professional analyst,
Tony B.

dealingdesk@finotec.com