As investors continue to question the long-term effectiveness of Abenomics before a sales-tax hike takes effect in April, where the yen's headed is anyone's guess. However, if chart patterns are anything to go by a further weakening of the safe-haven currency is in store.
The yen fell to its lowest level against the U.S. dollar in three weeks early last Tuesday after the Bank of Japan extended three special loan facilities by one year and boosted the maximum amount of the loans – a move the market interpreted as a "mini ease." However, the Japanese currency remains off of recent multi-year lows above 105 per dollar touched in late December.
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While uncertainty over how investors may react to the April sales-tax hike could keep the yen from weakening further in the short term, charts indicate a test of 110 may be in the cards.