DailyFX Analysts Top Picks: EUR/JPY and GBP/JPY
- EUR/JPY and GBP/JPY Top Picks
The Japanese Yen has rallied significantly over the past 2 trading days on risk aversion and carry trade liquidation. EUR/JPY and GBP/JPY are the top picks for DailyFX analysts, read on to find out why:
Chief Currency Analyst - Kathy Lien
My picks: Short NZD/JPY
Expertise: Combining Technicals with Fundamentals
Average Time Frame of Trades: 1-3 Days
The New Zealand economy continues to go down the tank and the only reason why the New Zealand dollar has been rallying is the US dollar weakness. The country is at the brink of a recession, keeping the Reserve Bank of New Zealand's hands tied. I also doubt that the US stock market decline is over. Technically the 50 and 100-day SMA still provide stiff resistance at 81.15.
I am bullish here (80.53) against 81.15, targeting 80.25 for half of the position and 79.53 for the remainder of the position
Senior Currency Strategist - Boris Schlossberg
My picks: Long CADJPY
Expertise: Fundamental
Average Time Frame of Trades: 12-24 hours
Super hot CPI numbers should keep USDJPY well bid today and betterthan expected Manufacturing Shipment from Canada should be postive for loonie so going long CADJPY is my call for the day
Quantitative Currency Strategist - Antonio Sousa
My picks: Buy EUR/JPY
Expertise: Fundamentals, Volatility and Sentiment
Average Time Frame of Trades: 1 week to 1 year
Despite a recent sell off, the EUR/JPY up trend remains intact on speculation the European Central Bank will be more aggressive than the Bank of Japan on their fight for price stability. Indeed, according to overnight index swaps, which measure interest rate expectations for next twelve months, traders expect the ECB to be more hawkish than the BoJ in the second half of 2008. While the ECB is expected to increase rates 1 more time, the BoJ is expected to do nothing to fight the sharp rise on energy prices. Looking ahead, I expect the ECB to keep its hawkish tone since inflation has exceeded ECB’s 2 percent limit for the last 10 months which could provide some upside momentum for the EUR/JPY. My recommendation is to buy EUR/JPY at 165 limit with a stop in a daily close below 162 for a 500 pips profit potential.
Currency Strategist - Terri Belkas
My picks: Short EUR/JPY
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days
I like EUR/JPY to the short side given the break of critical trendline support, which connected the March, May, and June lows. Furthermore, we saw the DJIA finally break below the psychologically important 11,000 level yesterday, suggesting that market-wide risk aversion has little hope of letting up anytime soon, which adds to downside risks for the Japanese yen crosses. A good target for EUR/JPY may be near the confluence of the 38.2% fib of 151.70 - 169.65 and the first monthly pivot point (support) at 162.81/88, though 165 may serve as a solid support level in the near-term.
Currency Analyst - David Rodriguez
My picks: GBP/JPY Long
Expertise: Quantitative Analysis, System Trading
Average Time Frame of Trades: 2-10 weeks
I still have yet to change my stance on the Japanese Yen, and by extension, my previous Japanese Yen shorts. I suggested that the EURJPY, GBPJPY, and AUDJPY were the best outlooks for this view, Yet it seems that the EURJPY has broken noteworthy support at medium and long-term trendlines at 166.00--placing doubts in my mind as to the validity of that specific trade. With that said, the GBPJPY currently stands at the confluence if its 50-day SMA and 4-month trendline at the 208.00 mark, and this sets us up for a solid risk-reward trade for the short term. Max risk should be placed comfortably below today's lows (208.01), while preliminary profit targets are eyed at intraday congestion levels of 210.50.
Currency Analyst - John Kicklighter
My picks: Short GBPJPY on the close
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week
There are sure trades in the yen crosses with a number of the most liquid pairs (USDJPY, EURJPY) already confirming trend breaks that offer significant room to run. However, I was already positioned for the USDJPY breakout last week; so I will look for a cross that has not already moved too far away from an entry level that wouldn't require an unbearable stop and/or an aggressive entry that would never trigger. Therefore, I'm keeping an eye on GBPJPY, which has yet to confirm its own breakout. Fundamentally, all of the significant UK event risk has crossed the wires for the week and Japanese data has little impact on price action. The true driver from this point on will be risk sentiment throughout the financial market.
Technically, this pair has been uncharacteristically range bound over the past month with a number of consecutive dojis with the highs and lows generally contained between 210 to 214. Working on its second, daily decline, GBPJPY is just now testing its rising trendline from March, a rising 50-day SMA (which has been influential over price action in the past), a pivot level going back to February and 38.2% fib retracement of the May 9th to June 26th advance all falling around 208.60. At the moment, the pair dropped below the level, but rebounded back to par with it. Given this pair's volatility and the strength of support that I'll need to be play this cautiously. Therefore, I will wait for a close below 208.50/60 on a higher time frame (8-hour, daily) and watch to see whether other yen pairs extend their own bearish break.
Currency Analyst - Ilya Spivak
My picks: Short EURJPY
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 week - 6 months
The Euro traded higher in a Rising Wedge formation against the Yen since late March. Today's price action broke Wedge support at 168.00, opening the door for extended downside to the 38.2% Fibonacci retracement of the 03/20-07/11 rally at 162.77.
Strategy: Short EURJPY at 167.11, set stop loss above recent wick highs at 169.70, target fibonacci support at 162.77
Currency Analyst - John Rivera
My picks: Short EUR/JPY
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 4-5 Days
Although the EURJPY has already made a significant move lower, there is little in the form of support for the pair. The next significant support level is 162.80 the 38.2% Fibo level of the 151.70 - 169.65 rally. Therfore, I am bearish the pair considering the weakening funcdamental picture in the Euro-Zone and the prevalent risk aversion in the market place.
DailyFX
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