JPY crosses

Trade of the day: Could it possibly be USD/JPY!

Big call given that we normally trade in a 15 pip range but I have a feeling that we could see a sharp move in USD/JPY, and I suspect that it will be down. There is plentiful buying interest between 77.50/65 at the moment so I would certainly not enter the market near current levels at 77.85. I’d rather wait for an intraday rally to 78.20, where corporate and real-money offers are waiting. I will start selling there, with a tightish stop, and see how the market develops from there.

My logic is that the market has been piling into long positions on the JPY crosses in the expectation of a return to risk-on conditions brought on by the Fed’s QE3. But the market is slightly unwilling to embrace this risk-on sentiment, as can be seen by the fact that the AUD is not out-performing the other majors. Therefore I’m concluding that the USD may well stay heavy after the FOMC statement but the JPY crosses will fall in a buy-rumour-sell-fact event.

If that happens, than USD/JPY could well fall below 77.50 and start setting off some more big stop-loss sell orders. That’s my theory anyway.

  1. Good to hear from you Raka. I’m going to try selling smalls 10480/85 with tightish stop and see what happens. USD still looks weak but risk trades bit overdone into FOMC so we may see AUD fall across the board into early NY is my guess? Overall still one massive range trade in AUD/USD so sell big rallies and buy big dips. Good luck out there

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