The Japanese Yen is likely to rise against the Euro
As we are observing s dramatic sell-off in share prices across the globe the biggest benefactor in these risk-off environments remains the Japanese Yen. The BOJ might have hinted at commitment to their 2% inflation target, however repatriation flows are weighing in to favor the Yen.
As we looked on the Chinese data set this morning we thought that this could be an ugly day for risky assets, and boy has it been one! All stock markets across the globe are dropping with emerging markets leading the wave of selling.
These stocks sell-offs have lead to Japanese Yen buying since local investors are selling foreign assets like stocks and currencies and are bringing their money home to the safety of local deposits. That has been the theme for the Japanese Yen market for more than a decade.
The Euro seemed resileint in the bewginning of the day since in case you didn't notice there was a set of very positive manufacturing data from the Euro Zone. However as the US market kicked in the impetus that the single currency had has been lost.
After spiking higher in tandem with the EUR/USD binary options forex pair, the EUR/JPY started diverging. The daily high has been marked at 142.40 but the substance of the American market has brought some agressive sellers in to push prices as low as 141.45.
With the price currently rebounding a little we are looking for an entry point to buy put options on a daily and weekly basis. If we see a rally towards 141.80 we are sure to jump in and take the chance for some nice profits.
The ideal level is 141.85, and the invalidation of this scenario would be if we see a sustained close above 142 on an hourly basis. In that case we would wait for a test of today's high just above 142.40 to make our next trading decision. Stay tuned to our forecasts for the latest opportunities to make decent money.