Comment: Some might say that price action last year was relatively subdued, trading between 95.00 and 80.00, but note that at these historically very low levels this represents a 16.65% gain for the yen. This is likely to be the case again this year, the yen neither the best nor the worst performer, as prices hover close to the record low at 79.75 of April 1995. If prices can hold below 86.00 in Q1 we favour a cautious test of 79.75 within four months, a move the authorities will no doubt resist. Downside pressure should increase in the summer for a drop to a new record low around 75.00/72.50 before recovering slowly in the second half of the year to 85.00. As always, if generalised US dollar weakness persists, the risk of a large downside ‘extension’ remains. Note that consensus opinion has it up at 89.00 by year-end.

A monthly close above 85.00 postpones a serious downside test and will probably set off a scramble to 90.00. Then sideways between 80.00 and 90.00.