FXWW News/Trade Ideas/USD/JPY

USD/JPY/EUR: The three ugly sisters

The big level for me is 93.40 in USD/JPY; this is where the big 1000 pip launch began after the April BOJ meeting. I don’t mean that this level should hold to the exact pip, that’s a ridiculous expectation in these volatile markets, but I do think that we need to watch for daily closes in and around there to see what happens.

  • If Fed begins to taper then that should be initially USD/JPY bearish as risk-off trades will be in vogue.
  • (I can’t even begin to imagine what might happen if USD/JPY starts trading in mid 80’s again after all the BOJ action?)
  • Macro funds remain long of pairs like EUR/JPY and GBP/JPY and this is also a downside risk factor.
  • BUT, surely Fed tapering and current BOJ policy IMPLIES that USD/JPY MUST go higher? Well yes, but that might be the medium term reaction.

In other words, don’t get married to your opinions and positions. Certainly it’s correct to have a bias but wait for ‘silly’ moves as they will certainly happen in both directions.

USD/JPY/EUR are the three ugly sisters and it just depends from which direction the light is shining to make one or the other look briefly ‘attractive’.

  1. TAPER OR NOT TO TAPER
    Be grateful if u can clarify
    U say —If Fed begins to taper then that should be initially USD/JPY bearish as risk-off trades will be in vogue.

    ForexLive says Perhaps a taper or two from the Fed on Wednesday will give USD/JPY some new life

    MY READING If Fed tapers–> fed is bullish—>U$ bullish—hence $/y bullish

    Tks

  2. Don’t see it that way Anil, but again a lot depends on what level its trading at. If it has already broken below 9200 say then doesn’t matter what they say or do, there will be huge positional liquidation. Whereas if 9340 support is holding really firm, then we will see a rally regardless. Levels as always are most important mkt issue

  3. As someone says——–logic seldom works in fx market as speculators always want to play against the market
    Hence,my logic wl not work.Hence, I am more in yr camp of thinking
    Thank you

  4. Given the double inside days in USDJPY, i suspect a false breakout in both directions at least initially. What happens after the first hour frenzy is less clear. If the Benank is as dovish as the markets expect,will we see profit taking from the USD bears based on “buy the rumour sell the fact”?

    If the USD bears are correct, shouldn’t USDJPY continue to grind down — why is the USD/JPY showing resilience over the last day or two?

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