Looking to sell the US Dollar to the Japanese Yen
In this week’s trade we are delving into the depths of a pair that has experienced a tremendous amount of volatility during the past year. Yes, some of you are already guessing correctly that we are going to talk about something related to the Japanese Yen. This time our strategy session is related to the USD/JPY binary options forex pair.
Into the start of the week the Japanese counterpart has proved to be quite a force to be reckoned with due largely to the unfolding stock market rally. Some risk metrics related to the stock market released yesterday have caused a selloff of the broad indices by more than a full percentage point. The US dollar sold off against the Japanese Yen and marked a new low for 2014 at 102.85.
We are quite keen to obtain more information about the state of US earnings and this is what is going to happen during the rest of the week. The question that remains is whether the guidance will be storng enough to warrant a further rally in US stocks. As most of our readers know last year has been quite stellar in terms of stock market performance.
Why do we mention this, well for a very simple reason – the USDJPY is the most correlated pair to stock market rallies. It rises as long as the stock market rallies. Looking at the charts we can easily identify that some substantial gains for the Japanese currency are being consolidated at this point. We are looking to sell rallies on a daily basis and for now the key level that we have identified and really like to use for buying daily put options is 103.90.
The big data point today will be the release of Retail Sales numbers form the US. The time that we are looking forward to is 13:30 GMT when the next batch of economic data is warranted to move the market. Consensus estimates are for a rise by 0.1% in December, up by 0.4% excluding the volatile Autos component.
Stay tuned for more information to our topic and we will share our revised opinion as soon as we see a changing market. For now we would not be looking to buy calls at any level, but we stay flexible as this is a very key metric to remain on top of the binary options market. Have fun trading!