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’.