Adjusting Open Positions in USD/JPY & NZD/JPY

Forex Trade Adjustments: 2014-04-22

Volatility has been quiet thanks to the Easter holiday, but the Yen is slowly grinding lower.  Upcoming data should bring life back to the markets, which means I’d like to reduce my risk.

USD/JPY: Retesting Strong Support

USD/JPY 4 Hour Forex Chart

USD/JPY 4 Hour Forex Chart

As I mentioned in my last trade update for both forex trades, if USD/JPY retests the next level of resistance at 102.70, I’d move my stop to breakeven (101.90).  That’s what I did, and I’m comfortable giving my trade less room to breathe ahead of global manufacturing PMI data on Wednesday.  This data has been more or less trending weaker, and another weak read may bring risk-off behavior temporarily (Yen positive).

If we get positive data, USD/JPY could move higher, and a sustained break and hold of 102.70 is interesting enough for me to possibly add to my position and trail my stop higher.

NZD/JPY: Hopping Back into NZD Long

NZD/JPY 4 Hour Forex Chart

NZD/JPY 4 Hour Forex Chart

The RBNZ meeting and monetary policy decision is coming up tomorrow at the end of the U.S. session (early Thursday Asia session), and this can really be crap shoot in my opinion.  There’s mixed sentiment on this currency: some think its strength is overdone or that it’ll hurt New Zealand’s economy, some think there will be a rate hike to 3.00%, and then there’s plenty of folks in some camp in between.  I’m definitely not smart enough to know what will happen, so I’m adjusting my position to best handle either dovish rhetoric or an actual rate hike.

I’m moving my stop up to 87.30 in case we do see dovish rhetoric and bearish reaction for NZD. If stopped out there, it leaves me with a very small scratch to my account, and if there is a rate hike, the trade is wide open to catch a bullish reaction if there is one.  I’m not going to put orders to buy more above the consolidation areas as I’ll watch and reassess after the RBNZ monetary policy meeting.

For both trades and from the Japanese Yen side, the weak Japanese Trade Balance data on Monday adds fuel to the bearish argument on the Yen (weak economic data means more stimulus from the BOJ later?).  So for now, I’m still comfortable holding Yen short, especially now that I’m positive on both trades and my risk is reduced.

What do you think about price action for either pair this week? What do you think the RBNZ will do with interest rates?  I’d love to hear your thoughts so please leave a comment below!