Pick of the Day: USD/JPY
Good morning! For a while now, we've been watching USD/JPY price action consolidate, but with the renewed fears in the US financial markets last week, we may have finally seen a breakout. Will the market finally catch momentum?
This morning, the USD bounced back after US Treasury Secretary Paulson asked the US government to back up Fannie Mae and Freddie Mac, as well as Fed Chairman Bernanke offering access to the discount window. That's great, but that brings up the question of how "bad are the financial markets?" Also, with the US government bailout, they further add to the public debt, thus making US assets less attractive. Bad for the Greenback kids.
So, I remain USD short biased for now, and with the break of the rising trendline I think we may see some momentum catch to the downside. I like a short play, but not until the market fully prices in the news that the US government may backup the GSE's. The Greenback may continue to rally further as the US markets open, but let's see what happens if the pair hits 107.00.
Short USD/JPY at 107.00, stop at 107.50, pt1 at 106.50, pt2 at 106.00
Remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.
No major event risk today, but we do have a busy week with a lot of potential volatility starting tomorrow. Stay tuned for updates and adjustments.
