The Japanese yen backed off today following the last week’s strong rally but not before touching the highest level in a year and a half against the US dollar and the strongest rate in three years versus the euro.
The yen rallied strongly in the second half of the last week after the Bank of Japan had stood pat, refraining from adding monetary stimulus. It is not a surprise to see a correction after such a strong jump. Over longer term, the outlook for the yen remains fairly bullish as traders will likely be reluctant to place bearish bets on currency unless Japanese policy makers send a strong signal about probability of monetary easing.
USD/JPY rose to 106.52 as of 12:26 GMT today after opening at 106.21 — the lowest level since October 2014. EUR/JPY climbed to 122.46 from the open of 121.73 — the weakest rate since April 2014.
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