The Greenback Goes ‘Sayonara’

With risk aversion running rampant once again through our domestic markets, we saw a significant flight from the U.S. dollar into the Japanese yen today. The U.S dollar was close to parity versus the Japanese yen a few months back but has since broken down by over 7%, a significant move within currency markets.

As Bloomberg reports, Dollar May Drop to 14-Year Low Against Yen:

The dollar may drop beyond a 14-year low of 87 yen if it closes below a “neckline” level of 94.08 yen, according to technical analysts at Citigroup Inc.

A support level at 94.08 yen represents the neckline of a so-called head-and-shoulders pattern, Citigroup analysts Tom Fitzpatrick in New York and Shyam Devani in London wrote today in a note to clients.

Sure enough the dollar did take out neckline at 94.08 and closed today’s trading at 92.65. For those who care, a ‘neckline‘ and ‘head and shoulders‘ pattern are standard technical terms within trading used to define price graphs. Our investing primer, to which I have linked, provides great definitions and pictorials.

Having taken out the neckline, what is the targeted level for the dollar versus the yen? Bloomberg offers further color:

that would “suggest a more aggressive downside target of sub 87,” the analysts wrote. The dollar touched 87.13 yen in intraday trading on Jan. 21. It was last below 87 yen in July 1995.


About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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