The forex markets over the past six months that I have been noticing, are taking a cue mostly from the stock markets for their movements. Though there can be another school of thought that may say that forex is an offshoot of trade and as such, should be necessarily be taking cues from the stock markets, I would prefer more views on the same before further comments.

As of now, my view, forex is following the stock markets (more precisely, the US). And that is where I flunked on the Yen, cause if the US is on an upswing, the Yen should weaken. But then, so should the Euro. And herein comes my theory that the currency movements do not necessarily follow ONLY the stock market. There are other factors such as the interest rate, political, economic, BoP and such issues not only of the home country of the currency in question but also with respect to the trade with the base currency country.

Any ways, what is the past is the past. Looking ahead, the Yen seems poised to test the 107 level again. A 105.50 to 107.50 range is in again with a bias on 107 plus later today. The Euro should try weakening to 1.5825 or so by the same time before losing some of its steam.