The Yen rose today to a 9 month high (JPY/EUR) as signs of global economic recovery faded for currency traders. The Japanese currency rose on account of being sought after as a safe haven. The Yen rose against all 16 of the major currencies, touching 89.25 to the US dollar, with a high of 89.14. it also rose against the Euro to 125.30, the highest level since April 28, 2009.

Contributing to the Yen’s rise were primarily the German consumer prices, which fell this month, suggesting a slowdown in the economic recovery in Europe, alongside the US dollar, which weakened for the second straight day, as concerns of the Fed Reserve keeping interest rates intact near ‘zero’, a decision likely expected by the end of today.

On the Asian side, the North Korean military activity sparked concerns of a possible military dispute in that region, sending traders reaching for their save haven trades.

The last three weeks saw Gold rushing forward touching the high of $1,140, due to economic uncertainty and demand for a hedging instrument. Today, the yellow metal has retreated slightly to below $1,130. Another factor contributing to the decline of the precious metal has been the charging US dollar, which today saw a further strengthening on expectations of economic recovery in the US.

In the Asian and early European sessions, the Dollar moved upward against all major currencies, particularly against the Yen, which has seen a slight weakening in recent times. It is currently said to be testing a major resistance at the 93 level, having moved beyond 91.25 and 92.75.

Analysts are now suggesting that the USD/JPY pair is likely to see a strong 2010, with the possibility of 100.00 not too far away, 3rd quarter likely as suggested. It is further suggested that 97 could be the level to watch out for for Q2 2010.

Since earlier this month, the Dollar has been on an upward movement, touching a high last week on the 14th when it hit 98.97. it has fallen only once since and today it continues to move upward making a new 2 month high at 91.85 (yesterday), trading range-bound today around 91.55 to 91.80. the 91.85 level is a key resistance level, which if tested, could lead to yet another high for the USD-JPY pair.

The dollar has been cashing in on investor sentiment based on economic recovery in the US, which has been ‘hurting’ the dollar’s attractiveness in carry trades. The US Dollar earlier had touched 91.87, the highest level seen in the USD-JPY pair since mid to late October.

Traders are now anticipating, given the market conditions and dollar performance, that the Fed could raise interest rates in the Fed meeting around June. The overall sentiment has been positive in the US on account of encouraging economic data.