As the Yen Had a Solid Start to the Year, Trading Attention Is Focused on the Dollar Cliff Edge

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On Monday, the Japanese yen began the year with small gains as traders considered the possibility of continued technical strength in front of thin holiday trading.

In the opening hours of Tokyo trading, the Japanese yen increased by 0.3% to 130.77 per dollar.According to chart analysts, the pair would experience further losses if it closed below the low of 130.41 set in the dollar-yen exchange rate in August.

Although the Yen is considered a haven currency, recent worries about Japan’s economic recovery and the continuing trade disputes between the United States and China have caused the currency to suffer.

However, other economists think the Yen may recover shortly due to the U.S. having economic difficulties, such as the impending fiscal cliff and debt limit worries.

Traders will also be watching for updates on the Federal Reserve’s bond-buying program, which has supported the U.S. economy but also weighed on the dollar.

According to some Asia-based FX traders who are familiar with the transactions but asked to remain anonymous because they aren’t authorised to speak publicly, some investors built tiny short-dollar bets on the off chance that a break occurs in the absence of typical market liquidity.

Overall, the Yen is expected to remain a key player in the currency markets in the coming year, with traders closely watching for any shifts in the global economic landscape.

Yahoo Finance stated, “The Yen has climbed some 16% from its October nadir amid government intervention, hopes for slowing U.S. rate hikes and speculation over the possibility of a policy shift from the Bank of Japan this year. The BOJ’s surprise December decision to tweak its yield curve control parameters is seen by many as a sign its ultra-easy monetary policy might soon be coming to an end.”

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