Options traders are adding to bets the yen will appreciate to a 14-year high of 84 per dollar, disrupting Finance Minister Hirohisa Fujii’s pledge to halt disorderly swings in Japan’s currency. The odds of the yen touching that level by the end of June rose to 73 percent yesterday from 64 percent on Nov. 24 as the currency posted its biggest two-day rally since July, options prices compiled by Bloomberg show. Yen bears are being forced to buy the currency to limit losses on previous bets for a decline as the yen strengthens to higher levels, according to foreign- exchange strategists.
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Dollar May Extend Recent Decline to 84 Yen: Technical Analysis
The dollar may extend its decline to the mid-84 yen level after sliding to a 14-year low today, Bank of Tokyo-Mitsubishi UFJ Ltd. said, citing trading patterns. Having breached “the low end of a downward channel starting in March,” the U.S. currency has the potential to extend its losses to around 84.50 yen, said Masashi Hashimoto, a senior analyst at the unit of Japan’s biggest publicly traded bank. That would represent a 176.4 percent retracement of the greenback’s rally from a January 2005 low to a June 2007 high, he said, referring to a series of numbers known as the Fibonacci sequence.
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