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At the Forex currency market the Japanese Yen rate continues to strengthen in the narrow trading range of  76.20-77.60 on Wednesday.

Forex forecast: MACD indicator for the pair USD/JPY continues to go down in the negative area, volumes are increasing; which, all together, gives a sell signal. Stochastic Oscillator is in the oversold zone and is traded near the border, not govong a clear signal.

Forex recommendations: in case of breakdown at the level of 77.60, the pair will go to 76.40 and 76.20. It is also possible that the pair will consolidate at the current levels. Note that sideways movement in the pair had been developing since July last year.

The data released on Wednesday showed that revised industrial output in Japan decreased by 2.7% in November against the revised decline of 2.6% a month earlier.

At the same time, the head of the Bank of Japan Mr. Shirakawa said today that economic recovery in the Country of the Rising Sun has suspended and situation in Europe represents the most dangerous risk for the economy. Local companies have no problems with credits currently; however the situation can become more complicated due to external influence.

Minutes of the last meeting of the Bank of Japan released earlier, stated that it is necessary to trace back the effect of the recent soft policy; potential impact from the expensive Yen also causes special concern.

Mr. Shirakawa, the head of the Bank of Japan noted earlier that growth of the JPY continues to negatively impact on the local economy and that current rise of the JPY was provoked by European crisis. He believes that if appropriate measures are not taken straight away, economy of Japan will decline sharply by 2030. Mr. Shirakawa also noted that interventions against Yen are acceptable and effective.

Statistics released earlier showed that trade balance in Japan was at the level of -Y496.5 billion in December. In addition, bank lending increased by 0.5% y/y in December against the growth of 0.2% y/y in November.

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