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How to trade USD/JPY now?

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CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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The US Dollar survived Janet Yellen’s speech yesterday. Her speech was geared towards calming the markets after a disturbing non-farm payroll (NFP) release on Friday. She certainly achieved this which led some analysts to believe that we’ll have to wait for until the next NFP release before traders will get a better picture when the Fed will raise interest rates next. Will it be as early as July or are we moving towards consensus of a September hike?

The other two factors influencing the exchange rate of the pair are volatility and the upcoming data points out of Japan. 

If volatility returns to levels seen earlier this year, the Japanese Yen will certainly profit from it’s safe haven status which means we could see a break of the yearly low at 105.50.

However, 106.50 held strong as support after last weeks battering which saw the pair collapse from 109 to 106.37. As long as we don’t see a daily close below 106.50 I see this as a strong support level. 

Depending on whether GDP figures in Japan disappoint tomorrow or not, we could see this as another catalyst for a move higher.

 

Where to enter and exit the market

Depending on your risk management, consider the following stop and profit target levels. 

With a clear technical set up in place with support levels at 106.50 and 105.50 and the fundamentals favouring the USD in the long run, I am biased towards supporting the bulls and going long.

Trading this set up, I am looking for profit target levels at 109, 111 and 114 with a stop just under 106.50.

If my stop get’s hit, I move on to the next trade. Never get emotionally attached to your trades. 

 

Happy trading

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.