Categorized | Commentary, Forex

Yen off 9-month low vs Dollar, Euro takes a dip

Opportune time for profit-taking?

Earlier today, the Japanese Yen recovered from a 9 month low against the Dollar, as investors bought the Yen at lower levels. The Euro dipped, however it stayed near recent highs in anticipation of a “liquidity injection” by the European Central Bank (ECB).

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In early Asian trade, the Dollar rose to 81.661 Yen, up by more than 7 percent since the start of this month. It later eased back to 80.68 Yen.

Following the Dollar’s recent strong gains and Euro/Yen selling by Japanese exporters, many traders had seen this as an opportune time for profit-taking.

Many analysts predict that the Dollar/Yen will rise further in the long term. Some though believe that the Dollar may have limited scope to gain much above 82 Yen in the short-term. This could hold true, when one considers that there is a possibility of more monetary easing by the U.S.Federal Reserve.

The Commonwealth Bank of Australia has raised its Dollar/Yen forecasts to 90 Yen by the end of September and 92 Yen by year-end. This was done on the expectation that Japan’s terms of trade will deteriorate in the coming months.

Others are sceptical the recent moves mark the start of a long-term uptrend in the Dollar/Yen. The consensus amongst detractors, is that for the Dollar/Yen to trade higher, the interest rates in the U.S. and other countries outside of Japan should move higher, and this is not the case as yet.

The Euro climbed to 109.915 Yen, its highest level since the 31st of October 2011, before slipping to trade at 108.14 Yen.

The Euro was down though on the Dollar at 0.4 percent on the day at $1.3400. The Euro has been within range of a 2 and a half month high of $1.3486 set on Friday. It could see more possible gains before the ECB’s second offering of unlimited 3-year loans to banks, in a longer term refinancing operation (LTRO) on Wednesday.

Growth-linked currencies, generally seen as riskier, fell after the impact of weaker equities. This is causing concerns about the impact of higher oil prices on growth.

The Australian Dollar, which touched a six-month peak of $1.0845 on the 8th of February, was down 0.4 percent at $1.0661

All the best!
Adrian Jones

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EXOTIC TRADING

Euro Yen Rises To 3 Month High

The Yen recovered from a 9-month low against the US Dollar in early trading on Monday when stop-loss selling prompted investors to buy the currency at lower levels.

The Euro dipped but stayed near recent highs coming off a 2-1/2 month high hit on Friday with more gains possible before the ECB’s second offering of unlimited 3-year loans to banks on Wednesday.

News Watch For EURJPY

There are High Impact news releases scheduled for the EURJPY pair this week but look out for reaction to the G20 meetings taking place in Mexico City and the ECB decision on Wednesday.

EURJPY Analysis

The up trend seems to have run out of steam for the time being and as I write we may get the opportunity to enter a sell trade at the close of the current candle. Take a look at the following chart:


I got a signal for a counter trend trade and as you can see, price has returned within the original bullish channel and is getting close to closing below the black dashed trendline.

Should we get the close below the trendline we may consider entering a Sell order but a more conservative entry we may consider entering short once price has closed below the 107.650 level.

Potential targets include the 106.600 level where a move down may find support. Will be interesting to see how this one plays out.

Have a great ahead!
Wesley Govender

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We reached our trend line target for Friday with a gain of about 145 pips. The market actually blew past it and topped out at 1.5898 before falling back down a tad to close the week off at 1.5870. On the daily chart we’re sitting on the 200 sma and we can consider this a potential double top. My indicators are making substantially lower lows however creating some bearish divergence. This indicates to me a bias to the short side.


On the 4h chart the indicators seem to be following price after having bounced off the 200sma last week. Right now we are trapped between the 200sma on the 4h chart and the 200sma on the daily chart. From the 4h chart you can see that we don’t have a perfect double top. In fact, one side is slightly lower than the other, but it is fairly close and the indicators are following price.

My target will be the trend line and then to look for support and reasons to go long once more.


In the news today we have Pending Home Sales for the Usd at 10:00am EST. This is a high impact release so price can do some crazy things. Be sure to either exit your trades or have your stops in place.

Have a great day and safe trading!

Josh Schultz

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Monday 27nd Feb 12

USD/CAD 4 hour chart

1st Resistance – 1.0047
1st Support – 0.9972
Monthly Pivot –1.0101
Weekly Pivot – 0.9984

Strategy – Play off support and resistance.

Tactics – Wait for resistance and support to hold and then enter.

I close my GBP from Thursday with a nice profit. I am watching the USDCAD. If you look at the image you can see that the 1.0047 area is very strong. This is a good low risk shorting trade with a target of weekly pivot of 0.9984.

Mark McRae

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