<Dollar/Yen>

Volatility surrounded the BOJ's meeting last week with the scale of its monetary easing policy being less than anticipated. There is a belief though that there are many short Yen positions left in the market.

The market believes that the Asset-Purchase Fund will increase by 5 trillion - 10 trillion Yen to 70 - 75 trillion for six more months, and the duration of Japanese government bonds will be extend to three years from the current two years.

When USD/JPY broke below 80.26 it formed a perfect downtrend channel in the daily chart, and the daily support level is now about 79.50. Because of Japan's golden week holiday, actual demand for the currency is lower than usual and Asian market is likely to see some fluctuation.

Existing selling positions of the Yen and the movement of the U.S. economy have caused concern about QE3, which may lead to continued low U.S. interest rates. Virtually no dollars will be sold by exporting companies in Japan, due to the holiday.

Expected Range: 79.20-81.70

Recent lows are being challenged, and a slide triggered by the execution of stop orders is possible. Sell USD/JPY on a rally.

<Euro/Dollar>

Based on the daily chart EUR/USD has strengthened and broken the daily Ichimoku cloud. Although the interbank market sold EUR/USD on the rally after it broke below 1.30, the closure of short positions increased, and has continued to push the price further north.

We anticipate resistance around 1.35 and 1.33 will be the initial target. Technically, a buy after the 1.33 break may be viable.

Potential buying below 1.3385 (at about 1.3100) may be a viable idea. Place your stop order below 1.3000, and take your profit after breaking 1.3485. A significant fall of Euro/Yen and other Yen crosses may drag Euro/Dollar down to these buying levels in the near future.

Expected Range: 1.3050-1.3400 Buy EUR/USD on dips

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