<Dollar/Yen>

Under expectation of U.S. employment, together with the expectation for QE3 dragged the dollar down to 77.66. Even though the dollar increased to 78.72 because of the rumor about BOJ intervention, it still closed at 78.03. The reason is still not clear until the release of Foreign Exchange Intervention Operations (https://www.mof.go.jp/international_policy/reference/feio/monthly/240531.htm).

Nevertheless, since the dollar couldn't be sold at 80's for actual demand, it may be sold from 79.5's. Even if the BOJ may intervene after breaking below 77.5's or 77 versus the yen, I don't think the international market will agree with that. Since U.S. has to keep the dollar low in order to encourage export growth, it is hard for BOJ to buy the greenback and sell the yen. BOJ's intervention is unlikely until a break below 75.32 or 75 against the yen happens. Of course the BOJ can do it anytime, but noticing international monetary institution in advance is a common practice. Since discontent arose from Europe and America because of BOJ's last autocratic intervention, the possibility of doing this again is not high.

Expected Range: 76.75-79.35. The dollar is heavy. Possibility of intervention at 77

<Euro/Dollar>

Since net short of the euro has grown too far, a large scale of closing of selling positions may occur at any time. However, it is too fast to close the selling positions for taking profit or to buy the euro. If ND-PASOK coalition government can be formed in the re-election, the euro may probably rebound to about 1.27-1.28 against the greenback. But the problem of Spain and Italia may restrict the rebound.

Technically, if a break below 1.225 happens, the euro may even slide to 1.2150. An upside break above 1.2825 seems to be impossible. Since the austerity policy will not be decided until the next government form, the limit of rebound should be at 1.2630.

Expected Range: 1.2150-1.2630 Be aware of further slump

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