Plenty of people asking me about the big pairs, EUR/USD and USD/JPY, as this is what they are used to trading and they find it difficult to start concentrating on the crosses.
- USD/JPY: Positioning has not been a major issue with this pair for some months now. Central bank policy is the main driver and the Fed has already started minor tapering whilst the BoJ are more likely to stay expansionist. On a long-term basis, this pair is quite heavily under-valued in my opinion but on a short-to-medium term basis one can argue that it has already had a decent correction off record lows. On a risk-reward basis, I’d try picking short-term bottoms between 100.20/70 and see what happens.
- EUR/USD: The EUR looks likely to fall further against the GBP and the AUD and with big cross moves underway, I’d expect this supply to eventually have a significant effect on the EUR/USD. I tend to throw technicals out the window in these momentum-less sideways markets so its a matter of watching closely and selling when pairs like GBP/USD and AUD/USD reach resistance levels.