Yen advances as stocks slide

The yen is the top performing currency at the open with an advance of 0.16% against a stronger dollar. A risk sell-off in Europe helped support both the yen and the greenback as stocks tumbled and higher yielding currencies came under pressure. The USD/JPY pair broke below the key 61.8% Fibonacci retracement taken from the intervention advance at the 77-handle in overnight trade before encountering support at 76.80. Interim support now rests here with a break below eyeing subsequent floors at 76.65, the 76.4% retracement at 76.48 and the 76-figure. Topside resistance now stands at the 77-handle backed by 77.30 and the 50% retracement at 77.50. Again we note that intervention concerns are likely to see yen advances tempered as Japanese officials continue to eye the FX markets for “excess speculation,” with pledges from Prime Minister Yoshihiko Noda that actions will be taken to aggressively combat, “excessive currency fluctuations.”

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

77.59

50-Day SMA

76.92

20-Day SMA

77.05

2011 JPY High

75.50

The pound is the weakest performer an hour into US trade with the GBP/USD pair off by more than 0.82% early in the session. The dollar continues to pare some of the losses seen overnight with equity markets remaining on the defensive on continued European debt concerns. The pound broke below the key 61.8% Fibonacci extension taken from the October 31st and November 8th crests at 1.5950 before rebounding off the 76.4% extension at 1.5910. Interim support now rests here with subsequent floors seen at 1.5880 and the 100% extension at 1.5840. Topside resistance holds at 1.5950 backed by the 50% extension at 1.5985 and the 38.2% extension at 1.6020. Traders will be eyeing key data out of the UK tomorrow with the October CPI and retail prices on tap. Consensus estimates call for inflation to ease to 5.1% y/y from a previous read of 5.2% y/y. With the MPC continuing to voice concerns regarding undershooting the 2% inflation target, investors will be closely eyeing the data ahead of Wednesday’s quarterly inflation report.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

1.6015

50-Day SMA

1.5794

20-Day SMA

1.5958

2011 GBP High

1.6745

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
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About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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