The yen will probably stay weaker than 100 per dollar after falling beyond the key technical level yesterday for the first time in four years, Deutsche Bank AG’s Alan Ruskin said.
“Prior to this move, we actually saw 100 as quite strong resistance,” Ruskin, the bank’s New York-based global head of Group of 10 foreign-exchange strategy, said in a television interview on “Bloomberg Surveillance” with Tom Keene and Sara Eisen. “Now I think 100 is really the support region for dollar-yen.” Resistance is a level on a chart where sell orders may be clustered, and support is where buy orders may be found.
Strength in the U.S. currency has also contributed to the yen’s losses against the dollar, Ruskin said. He recommended betting the greenback will keep appreciating versus the Japanese currency, forecasting that the yen will decline to 105 in the next two months.
The yen slumped 1 percent to 101.62 per dollar as of 12:45 p.m. New York time and reached 101.98, the weakest level since Oct. 21, 2008. Japan’s currency slid 0.4 percent to 131.75 per euro after reaching 132.26, the least since January 2010.
“These moves are large by any measure,” Ruskin said. “They’re fast. But I think they’re actually moving in the right direction with fundamentals.”
The Bank of Japan’s measures to stem 15 years of deflation have the currency headed for its longest streak of monthly losses in almost two decades. The central bank said April 4 it would increase its bond purchases to exceed 7 trillion yen ($69 billion) a month, exceeding the 5.2 trillion yen forecast by economists in a Bloomberg News survey. It also suspended a cap on some bond holdings and dropped a limit on debt maturities.
The Japanese policy makers maintained the unprecedented plan at an April 26 meeting and predicted inflation will almost match their 2 percent target in two years.
The yen has dropped 13 percent this year, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The U.S. dollar has gained 3.8 percent, and the New Zealand dollar is the biggest winner, with a 3.9 percent increase.