USD/JPY Forecast DEC. 30, 2011, Fundamental Analysis

The USD/JPY pair dropped early Thursday after it recorded its lowest level in three weeks the day before, as risk aversion returned to hit the financial market causing the safer assets such as the yen to increase.

The US dollar soared against most of its major counterparts, recording its highest level in eleven months against the euro, as the European Central Bank announced that its balance sheet increased after it lent more money to the financial organizations last week.

The ECB announcement increased demand for safer assets as a safe haven, where the Japanese yen soared against the euro to its highest level in more than ten years, while the USD/JPY pair retreated but still within the same trading range that dominated the pair for five weeks.

On Friday, both economies will not issue any fundamentals, where the pair’s movement will depend on the current market sentiment.

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