BoJ To Drive Short-Term Yen Trade

A quiet day in the markets today with the US on holiday.

However we have fun and games in the form of the Bank of Japan tonight.

Yen has been falling like a stone in water lately and the Bank of Japan could set the short-term tone tonight.

First thing we need to watch for is talk on stimulus and Yen strength. Further stimulus has already been largely priced in, although I still wouldn't be surprised if we saw a further pop to the upside on this pair, but talk of required Yen strength or a less than aggressive monetary policy could cause USD/JPY to drop and pull other Yen crosses with it (number of note is 10 to 15 trillion yen in stimulus).

We also need to be wary of any commentary on the Inflation target set by the BoJ. Sure you have seen a few articles on this but essentially an increase from the 1% inflation target to 2% is really what people are looking for, if this doesn't happen the USD/JPY could suffer and we could see some Yen strength.

All this said if the Bank of Japan delivers on what it has been threatening to do 95.00 could easily be on the cards for the pair.

EUR/USD
Euro actually managed to do absolutely nothing today. I continue to like buying opportunities on support for the 1.3250 level but concede this market is relatively choppy in these conditions.

Safer plays may form either looking for a break above the 1.3400 handle looking for 1.3470 or on a break back below 1.3250.

Personal Bias: Neutral / Bullish above 1.3250
Support: 1.3300 then 1.3255/50
Resistance: 1.3400

My Strategy: Look for sell opportunities below 1.3250 - buy opportunities on a test of support, either the 1.33 or 1.3250 marks.


GBP/USD
Today the pound continued its drop on light volumes down to support level at 1.5820, tested it and closed very slightly above.

I suspect we move higher from here, with a relief bounce but we could easily see a push lower from these levels.

Personal Bias: Bearish
Support: 1.5820
Resistance: 1.5900 (200 day SMA), 1.6000

My Strategy: Trail stops lower, a break of the 1.5820 and close below could offer further shorting options. Bounce higher watch the 1.59 and 200 day SMA as initial resistance followed by the 1.6000 handle.

AUDUSD
Aussie is in a bit of sideways chop at the moment, today it did very little and formed an inside bar.

My overall bias is now moving towards Bearish eyeing a breaks of support but I am really sat on the sidelines for the moment.

Personal Bias: Neutral towards Bearish (although technically I should be Bullish)
Support: 1.0480 / 1.0460
Resistance: 1.0560 / 1.0600/ 1.06020

My Strategy: Stand aside / Breakout play. I like the idea of a short option and have taken a small short myself but think we need to see a clear break of support or resistance for this to have momentum.


USD/JPY
I'm still Bullish this pair even though it seems completely over extended, however I will keep an eye on the BoJ meeting tonight.

Looking at the monthly chart, 94.00/95.00 isn't unreasonable in this pair and I like the idea of this now forming a range between the 94/95 and 87 marks. Pull backs could offer good buying opportunities.

Personal Bias: Bullish
Support: 87.00 ?
Resistance: 93.80???

My Strategy: Watching for remarks from BoJ, if a short option does come it could well be very aggressive.

USD/CAD
Still like this pair for a move lower and continue to hold short with only a break above the swing high negating my bias.
Now like to see this pair push past the 0.9825 mark to open the door for a further move lower, or rejection upper resistance for an initial range play to test support.

Watch the CAD data on Wednesday night to set the tone but CAD Wholesales today came in better than expected.

Personal Bias: Neutral
Support: 0.9880 / 0.9820
Resistance: 0.9970 / 1.000

My Strategy: Potential for a long entry on Friday morning, however I remain on the sidelines for now. If we get a risk reversal and a stronger dollar this pair could well test the 200 day moving average and parity.

Rejection of resistance could offer good short opportunities, alternatively break and hold above the 200 day SMA would negate this for a Bullish bias.

NZD/USD
Interesting price action on the Kiwi. Trading in a nice range set by the previous weeks movements.

A break from these could enhance movement in direction of the break

Personal Bias: Bullish
Support: 0.8320? / 0.8285 / 0.8170
Resistance: 0.8460

My Strategy: Although my bias is for Bullish momentum, the poor data and weekly rejection of higher prices last week could offer a short opportunity.

Key will be a break of the support offered by the weekly range last week.

If price manages to hold above this I suspect we move higher from here and I will look to position myself long, if we break and hold below the support level I will look for good short entries.

GBP/CAD
Interesting set-ups on the GBP/CAD, if we see further Pound weakness it could play on this pair especially given the stronger Canadian Data.

Monthly lows by the 1.55 mark in its current range offer good risk reward as well.