Trading the Range Bound USDJPY Using the Fed As the Guide
FOMC has signaled that their policy will tighten and that their balance sheet is likely to begin unwinding later this year. As such, this should fuel a revived interest in USD strength.
Yet looking at the range bound whipsawing price action of late, it seems that the markets have interpreted the Fed's hawkishness (in the midst of the less-than-impressive economic data) as a sure sign that it has made a policy mistake.
However, Revelation Trading chooses to differ. We still like the long USDJPY trade on any dips to 109.45 targetting 111.80 and 113. Here are our reasons:
a. Initial jobless claims at multi decade lows
b. Likely to see better payrolls in June
c. Probable Job gains
d. Difference in monetary policies between the US and Japan
Yet looking at the range bound whipsawing price action of late, it seems that the markets have interpreted the Fed's hawkishness (in the midst of the less-than-impressive economic data) as a sure sign that it has made a policy mistake.
However, Revelation Trading chooses to differ. We still like the long USDJPY trade on any dips to 109.45 targetting 111.80 and 113. Here are our reasons:
a. Initial jobless claims at multi decade lows
b. Likely to see better payrolls in June
c. Probable Job gains
d. Difference in monetary policies between the US and Japan
Comment:
Even though USDJPY did indeed break up out of 111.70 I have decided against longing it. Cos Revelation Trading reckons there is not an edge to mitigate the risk given that the dollar index is not moving in tandem with the USDJPY's upmove. Thus decided to err on the side of caution and skip this trade altogether.