Intervention is working

It has been two weeks since the G7 announced extraordinary coordinated intervention in the yen post the earthquake and tsunami. Since then the intervention has worked. On a trade weighted basis (the yen vs. its largest trading partners) the yen is down 10 per cent from its peak on the 11 March. It is currently testing a key support level just above 130.0, the double bottom seen in July 2010.

What does this mean? We may see a bit of sideways yen action for a while as investors digest the recent action in the Japanese currency. However, we believe that investors will pounce on any yen strength to reassert short positions as we enter Q2.

Source: Forex.com

05.04.2011