The value of the yen continues to mostly be a factor of risk: when European headlines are bad, the yen gains across the board and is the No. 1 safe haven currency. However, Japan is far from being “safe”. Debt: The huge debt mountain is still there and there’s always a danger that it could erupt one day. This day currently seems far, but the threat exists. Stalling exports: Japan saw a drop in manufacturing production during June, for the first time in 2012. This is a result of stalling exports. Energy: One of the factors that weighed against the yen was the change in energy policy. Around one year after the horrific earthquake, tsunami and nuclear disaster at Fukishima, Japan closed down all the nuclear reactors. This was a big change in flows, as Japan found itself importing coal and oil for energy. This hurt the seemingly eternal trade balance surplus. And now, Japan is gradually beginning to re-open them, despite protests. If this process gains traction, we could see a stronger yen. Stimulus fades away: A lot of money was put into the economy after the disaster, and this helped the economy. However, the economy finds it hard to stand on its own, and after an OK first half, the second half of 2012 doesn’t look too good. Sales tax and potential political crisis: The Japanese government is pushing a hike in the sales tax. The hike is due only in 2014 and could encourage consumer spending before the hike comes into effect. However, the heated political debate could force the government to resign Reaction to US Indicators: In the shorter term, USD/JPY reacts in the most “logical” way to US indicators: the pair rises on positive indicators and falls on bad ones. This isn’t always the behavior seen in other pairs. Another Fed decision that doesn’t include QE3 could boost the pair. All in all, the pair continues having long term potential to rise, but this may be slow, and more trouble in Europe can keep it low. This article is part of the Forex Monthly Outlook. You can download it by joining the newsletter in the form below, which appears on any article on Forex Crunch. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next EUR/USD July 18 Edges Lower as Markets Disappointed as Kenny Fisher 10 years The value of the yen continues to mostly be a factor of risk: when European headlines are bad, the yen gains across the board and is the No. 1 safe haven currency. However, Japan is far from being "safe". Debt: The huge debt mountain is still there and there's always a danger that it could erupt one day. This day currently seems far, but the threat exists. Stalling exports: Japan saw a drop in manufacturing production during June, for the first time in 2012. This is a result of stalling exports. Energy: One of the factors that weighed against the… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.