The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Following on from my potential trade idea yesterday, I continue to wait for a break of 0.9321 before looking more favourably at short positions.
I actually like buying USD/JPY around current levels (spot now at 101.84), although this is more a reflection of the technical set-up. Looking at the daily chart, we have seen the pair close above the April downtrend, as well as the neckline of the double-bottom printed during July. The technical target of the double-bottom (chart below) is 102.50, so I would look for this as a potential profit target, with a potential stop loss at 101.55 (just below the 38.2% retracement of the recent rally from 101.09).
With a raft of key US data (2Q GDP, FOMC meeting, employee cost index and payrolls) in play this week, it’s interesting to see a slight move higher in short-term treasuries. This is supporting the USD and throwing weight behind the trade.