The yen is poised to weaken toward a seven-year low versus the dollar, trading patterns suggest, amid prospects that a strengthening U.S. economy will allow the Federal Reserve to raise interest rates this year.
The bias is for further yen declines, according to JPMorgan Chase & Co. and IG Markets Securities Ltd., after the dollar-yen exchange rate closed above its 21-day moving average for the first time in a month on Feb. 6, when Labor Department data showed the biggest three-month rise in U.S. payrolls for 17 years.
Analysts point to a re-test of the 119 level for the pair this week, the upper boundary of a triangle pattern formed from the dollar™s multi-year high of 121.85 yen reached on Dec. 8. The two currencies rose to 119.22 on Feb. 6, before retreating to 118.48 as of 1:16 p.m. in Tokyo.
U.S. data due later this week, including January retail sales, will be important in determining the direction of dollar-yen, Ishikawa said. Consumers probably cut spending by 0.5 percent last month compared to December, when sales fell 0.9 percent, according to the median estimate of economists surveyed by Bloomberg News before the Feb. 12 report.
Source : Bloomberg