-
Sold USDJPY and booked profit on half
-
Safe haven flows still positive for Yen
-
BOJ may not want to be so aggressive
TAKING ADVANTAGE - Early Wednesday, we saw some wild and wacky price action in the Yen, with USDJPY initially surging on reports of details of this week's BOJ stimulus package, but then pulling back sharply once those reports were denied. But I was able to take advantage of the move. I was alerted to the sharp rally in Asia and quickly surveyed the price action determining the move was way too aggressive in some very thin trade, and that even if the package was confirmed, the risk for significant upside from there was limited.
MANAGEMENT - But I got even luckier with the position, as the news ended up being nothing more than rumor and with that came the very fast retreat back towards daily opening levels. I have since booked a very nice profit on the position, exiting the final portion early Thursday. Now I'm not entirely sure whether or not USDJPY moves higher from here or not, but I do believe this market still has a good deal of downside ahead of itself and will be looking to sell again into rallies. There are two major reasons behind this view.
ONE AND TWO - The first reason is that I believe US equities are very close to another major pullback and with that pullback will come correlated downside pressure in USDJPY. The Yen is still (as much as it shouldn't be given Japanese fundamentals) a currency that benefits greatly from risk off flow and as such, lower equities should mean lower USDJPY. The second reason is the onset of comments from officials expressing concern over the limitations of monetary policy. There is a growing consensus that more is no longer better and this could keep the BOJ from doing too much this week.
This analysis is for informational and educational purposes only. This is not a recommendation to buy or sell anything. MarketPunks is not a financial advisor and this does not constitute investment advice. All of the information contained herein should be independently verified and confirmed. Please be aware of the risks involved with trading in currencies, stocks, commodities, cryptocurrencies and sports. Do not trade with money you cannot afford to lose. It is recommended that you consult a qualified financial advisor before making any investment decisions.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.