The USD/JPY pair dropped heavily since the beginning of the week, as equities strong slide and risk averse dominated the market. The Japanese currency was bolstered against major currencies on haven demand amid rising uncertainty and fear over the outlook.
The concerns about the European debt crisis triggered the negative sentiment in the market since last week. While on Monday the bearishness extended after Standard & Poor’s cut its credit outlook for the U.S to “negative”, which increased demand for the Japanese yen as a safe haven.
On the other hand, major currencies are loosing grounds against the greenback, as markets involved into some profit taking ahead of the Easter holidays with the high uncertainty dominant in the market and fear prevailing.
On Wednesday, the Japanese economy will release the merchandise trade balance for March at 23:50 GMT. The previous month it recorded a surplus of 654.1 billion yen and is expected to narrow to 568.6 billion yen.
Exports are expected with 1.1% drop during March from previous increase of 9.0%, while imports are expected with 5.9% rise following 9.9% surge. Trade was interrupted after Japan witnessed the worst earthquake in its history during the month which halted exports and caused many companies to shutdown factories and stop productions.
The trade figures are to offset the effect of Tertiary Industry Index which is expected at 0.1% down from 2.1% as the data is for February and overdue since the economic status changed drastically following the earthquake.
The U.S economy is to release more housing data with existing home sales for March at 14:00 GMT. Home sales are expected at 5.00 million with 2.5 percent rise reversing higher from the previous 9.6% slump.
The U.S. housing data is anticipated to show some improvement during March, which could help the greenback to rebound against the Japanese yen on gradual easing woes over the outlook.
Written by ForexMansion.com