The dollar has weakened against the Japanese yen this morning and is approaching support at 98.13 that may serve as a potential buying opportunity for a short-term move higher. In the larger picture, the pair has been in an uptrend since forming a double bottom at 87 yen in January. Since then, however, the pair has topped out at just above 101.00 and has pulled back since early April. Ultimately such a trade remains highly risky as global markets plunge on concerns that profitable US financial results will be unsustainable in the quarters ahead. Also raising fear are rising defaults in safer loans and credit card payments. On the technical front, the Yen’s correlation to risk aversion means a possible sell-off in the MSCI World Stock Index could send investors flocking to the currency.
