USD/JPY Forecast Jan. 02, 2012, Fundamental Analysis

The USD/JPY pair dropped last week to its lowest level in three weeks, where the Japanese yen soared against other majors as risk aversion returned to the financial market.

The risk aversion game is the main theme for the global financial market, where investors’ confidence determined the trading direction; whether to boost risky assets or to abandon higher-yielding currencies.

The expectations for the New Year still not clear, as the EU debt crisis still the main theme in the financial market, which will keep the risk aversion scenario fueled in the market.

While the BOJ could intervene in the FX market if the Japanese yen continued its upside movements against the dollar, which hurts Japan’s exporting companies.

On Monday, both economics will not issue any fundamental due to the New Year holiday, where low volume will dominate the pair’s movement.

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