DailyFX Analysts Bullish Yen Crosses
- 7 out of 9 DailyFX Analysts Bullish Yen Crosses
Over the past few trading days, the Japanese Yen crosses have done very well thanks to the rally in the US stock market. Seven out of the nine DailyFX Analysts believe that the yen crosses will continue to move higher. Read on to find out why:
Chief Currency Analyst - Kathy Lien
My picks: Long EUR/JPY
Expertise: Combining Fundamentals with Technicals
Average Time Frame of Trades: 1-3 Days
The Euro hit a record high against the Japanese yen today and is now within a whisker of 170. Given that EUR/JPY is trading nicely within the 1-2 Standard deviation Bollinger and the fact that moving averages are in a "perfect order," I think that the currency pair will not only break 170 but move well beyond it. Therefore I am bullish EUR/JPY here at 169.50 against 168.20, looking for a move beyond 170.
Senior Currency Strategist - Boris Schlossberg
My picks: Short NZDJPY
Expertise: Fundamental
Average Time Frame of Trades: 6 -24 hours
News overnight that Hanover Finance has frozen its funds is weighing in the kiwi as traders look ahead to the RBNZ decision later today that could signal a change of policy from the central bank. Meanwhile yen is way oversold as equities rally off lower oil prices and I think 108.00 will be formidable resistance. So short NZDJPY is my pick for the day with 81.60 stop
Technical Currency Analyst - Jaime Saettle
My picks: USDJPY short, against 108.57, target 105
Expertise: Technical
Average Time Frame of Trades: 1 Month (this trade is probably a week or 2 at most)
The decline from 108.57 is in 3 waves (clearly) and the advance from 103.76-107.08 is an impulse. As such, the USDJPY could be setting up for a bullish break (above 108.57). Another possibility is that a triangle is unfolding in the X wave position from 108.57 (this means that the rally from 95.72-108.57 is wave W). I am looking for USD weakness in the EURUSD so the triangle count seems probable. Expect a range between 108.57 and 103.76 for the next few months.
Quantitative Currency Strategist - Antonio Sousa
My picks: Buy EUR/JPY
Expertise: Interest Rate Dynamics, Volatility and Sentiment.
Average Time Frame of Trades: 1 week to 3 months
I expect the EUR/JPY to continue to rally in the days ahead. Last week, the Bank of Japan kept the benchmark interest rate at 0.5% and added that growth could slow even further because of higher energy prices which are discouraging businesses and consumers from spending. On the other hand, I expect the ECB to keep its hawkish tone since inflation has exceeded the 2% price stability limit for the last 10 months. According to interest rate swaps for deposits denominated in euros, the market has already priced additional rate hikes by the ECB in 2008. While the overnight rate stands at 4.25 percent, the 1 year LIBOR rate is being offered at 5.42 percent. My recommendation is to buy EUR/JPY at 168 limit with a stop in a daily close below 166 for a 400 pips profit potential.
Currency Strategist - Terri Belkas
My picks: Long USD/JPY
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1-3 Days
While this is not necessarily the time to initiate new positions, I think that traders that are already long USD/JPY should remain so. This is a shift from my bias on Monday, when I was in favor of Japanese yen strength. However, a push by both USD/JPY and GBP/JPY above their respective 200 SMAs has helped to change my mind. Furthermore, FXCM SSI - a contrarian indicator - shows that an increasing number of traders are short the pair (66% today vs. 62% yesterday). From a fundamental perspective, news that the Bush Administration has dropped its opposition to a housing package that would allow the government to back Fannie Mae and Freddie Mac in an emergency and permit the government to insure up to $300 billion in refinanced mortgages will likely provide a boost to US equities today (USD/JPY bullish). Furthermore, the release of the Fed's Beige Book this afternoon could spark a bit of dollar buying this afternoon. Though it is likely to note slowing growth throughout the economy, it may also focus on rising inflation pressures and given the hawkish comments we heard from Philly Fed President Plosser yesterday, this sort of news may resonate more with dollar bulls.
Currency Analyst - David Rodriguez
My picks: stay short the JPY against the British Pound and US Dollar
Expertise: System trading
Average Time Frame of Trades: 2-10 weeks
No new trades from me today. I've been calling for JPY weakness for the past couple of weeks, and we've finally seen the breakouts I was waiting for in the USDJPY and GBPJPY. I wouldn't necessarily advocate getting long in either currency pair at these levels, however, as risk would have to be a bit too loose to give the trades a reasonable chance of success. The USD/JPY has already hit my partial profit target at 107.78, but my more aggressive target is at year-to-date highs of 108.61. Move stops to break-even on the remaining USD/JPY position. My first profit target for the GBP/JPY is still 60 pips away from current market prices at 216.27.
Currency Analyst - John Kicklighter
My picks: Waiting for an upside CADJPY breakout
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week
My standing orders set for a GBPJPY breakout were finally triggered last night and the first target was already met. While still holding the second half of this trade, I'm actually looking to other yen crosses for potential price action. Looking at some of the more notable pairs: USDJPY has made its break but 108.50 looms as next resistance; AUDJPY and EURJPY are merely creeping higher; and CHFJPY is set in the middle of its own range. There is far greater potential with a CADJPY trade (which can be played conservatively or aggressively). Fundamentally, the Canadian economy is performing well and the greater than expected jump in inflation today will certainly rouse expectations of a rate hike from the BoJ. On the other hand, there is still significant event risk centered on the role risk appetite and the carry trade will play with this pair - though that too has improved as 2Q earnings cross the wires better than expected. Technically, the pair has been in an ascending wedge since April (six notable touches on rising support). Resistance is seen with a 200-day SMA and dominate 38.2% fib of the November 7th to March 20th down swing, both of which fall around 107.15 for a possible triple top in price action.
While a few other yen crosses have made for breakouts, a lot of the momentum from the initial breakout phase may be fading and that puts a CADJPY breakout in jeopardy. Therefore, if I want to play this aggressively, a small short near resistance and a build up as the downside unfolds can keep me from missing a prime range trade (though her my stops and targets will be close due to the broader technical setup pointing to an eventual upside breakout). A cautious approach on the other hand would be to wait for a confirmed breakout - a higher time frame bar (240-minute, daily) close above 107.15 to get long. A break through that level could then target 109.75 and 116.86 as prominate level - far greater potential than the 275 points of range trading to the short side. It will be important to see how USDJPY and EURJPY react moving ahead to gauge the developing price action in CADJPY.
Currency Analyst - Ilya Spivak
My picks: Long USDJPY above 107.37
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 week - 6 months
USDJPY now rests squarely below key Fibonacci resistance at 107.37, the 61.8% retracement of the 12/27/07-03/17 descent. It was noted in the latest Fibonacci Weekly that last week's move lower "found support precisely at a trend line that marked the USDJPY 06/22/07-03/17/08 downtrend. This line was broken as resistance in early June, suggesting the broad picture may prove the current down swing as a correction in a larger long term rally. With this in mind, we retain our bullish bias on USDJPY and will continue to look for a break above the 61.8% Fib in the near term."
Strategy: Go long USDJPY on a daily close above 107.37. A short-term target is at 108.62, with a break there opening the door for a test at 110.00.
Currency Analyst - John Rivera
My picks: Long USD/JPY
Expertise: Fundamnetals Combined With Technicals
Average Time Frame of Trades: 4-8 Days
The USDJPY has made a clean break above the 200 Day SMA for the first time since July, 2005. The break of such a significant reisiatnce level combined with the returning risk appetite on the back of the smaller than expected writeowns from U.S. banks, has the pair threatening 108. Bollinger band resistance at that price level is the only technical barrier until 109.90 the 50.0% Fibo 124.16-95.78. Additionally, credit markets and volatilty are begining to return to the levels before the GSE's troubles. Easing oil prices will also provide dolar support and increase the outlook for future consumer consumption and confidence. Target 109.
DailyFX
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