Safe-haven yen likely to outperform euro,
- Despite today’s bounce back, we expect the single currency to slide against the USD as it failed to break the channel resistance shown in the EUR/USD chart above. The breakout of the channel failed after a temporary breach on dovish FOMC as the weaker economic numbers from the Eurozone led the single currency lower. Based on the calculation model, the Euro is expected to decline to as low as 1.112 against the USD. The euro is currently trading at 1.128 against the USD.
- On the other hand, safe haven yen remains well-bid, receiving support from both a weaker USD and risk aversion. We expect the yen to strengthen to as high as 108.3 per USD. The yen is currently at 110.3 per USD.
Trade idea:
- Sell euro against the yen, at the current rate 124.2 and at rallies, with an initial target of 121.5 area.
