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Correction time for the Yen – SG

FXStreet (Barcelona) - “USD/JPY and 9-day RSI–overbought, that’s all”, says Kit Juckes, Global Head of Currency Research at Societe Generale after the fall in Japan’s Q3GDP triggers a downward correction in both Nikkei and USD/JPY.

Key Quotes

“The 9-day RSI for USD/JPY has been tracking between 75 and 90 all of this month, which is a very overbought level and a repeat of what was seen in October.”

“That period of excessively quick USD/JPT gains was followed by a consolidation from 110 to 106, taking the RSI back to 30. This time, the first level to look to go long may be around 114, though the news will come fast and quick as PM Abe is likely now to call a snap election in order to gain a mandate to postpone the hike in the consumption tax planned for next year (from 8% to 10%).”

“Either way, this is not the end of the yen’s devaluation, just a correction, though the FT did publish the first piece I have seen that suggests a weaker currency really is having an economic effect.”

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