Market Analysis for the week 03-26

The Foreign Exchange Market has never been as volatile especially combined with major participants not to mention the concerted efforts of worldwide banks assisting the Bank of Japan in its quest to stabilize market conditions. The ripple effects of the disaster and crisis that followed have become a venue for investors in the market to shift funds overseas and back in Japan's domestic market.

Although, during such process of repatriation and position adjustments have made the USDJPY strengthen to its lowest levels of 76.70 in value. Prompting the USDX retreating to the 75.32 as of this writing. There are no real signs any serious recovery as the range levels for the USDX as we mentioned now is reaching its 74.17 second to the lowest levels compared with the 70.79 basis point since March of 2008. And these are exceptional times with a lot more fundamentals involved in the market place. Such political unrest and weather or environmentally related issues are the majority factors that influences the market as against the normal business cycle in the world market.

With that said, the USDJPY price movement has influenced the cross rates of the GBPJPY, EURJPY and literally the USDCHF that made their respective lows during the relatively volatile day last week. Taking that into consideration a retracement back near the lows would not be discounted. With the continuing USD still lower and the European currencies gaining its strength has limited any serious recovery. Although, the concerted efforts of Central Banks intervention whenever needed will now be at the back of the minds of every trader. Unless, a certain challenge would happen like the last time a few decades ago wherein speculative trades have been overwhelming such bank interventions.

But the recent Yen movement have been in part speculative-loss liquidation for long carry-trades rather repatriation made by Japanese investors. Others may tend to disagree but these markets are played contrary to the market expectations. The behavior of the cross rates like the GBPJPY and the AUDJPY after the dropp ahve made its continuing recovery that eliminated long positions on the two cross rates.

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