The Euro is consolidating its next round of losses to the JPY
As the next round of volatility is embracing the currency markets, we are seeing some pullback in the Japanese yen crosses across the board. In light of the incoming tapering effort by the FED and the ongoing worries about Chinese growth numbers, we have seen some profit taking kicking in on positions long held one-sided.
According to a Chinese press report, there is a property crisis in one of the smaller cities around Beijing. After the biggest property developer in the region disappeared leaving a debt worth close to 1 billion Chinese yuan it is predictable that the situation in this city might only be the top of the iceberg.
The stock markets around the globe have declined substantially on Monday with Asian stocks taking the lead, European shares following up and the US NASDAQ index shedding more than 1%. As the stock market declines the risk appetite of investors diminishes and they flock back to the safety of their bonds.
This is the flow in pretty much every pair involving the Japanese yen. Prices have been dropping in all the EUR/JPY, USD/JPY and GBP/JPY binary options forex pairs. We will focus on some key levels to take a look at in the coming Tuesday trading session.
We have a serious support around the 139.60-65 area on the EUR/JPY pair, so our preferred way to play the next move here is to wait for an hourly close below this level which will open up the scope for a move towards 139.20 eventually. We would then buy daily puts on the EUR/JPY pair relying on today's expiry.
If we see a rally towards 140.15-20 we would be buying daily puts there too. If however we see a sustained break to the upside with an hourly close above 140.30, we would be reversing our strategy and buying daily calls again to target a move back towards 141.00.