The Japanese Yen staged a nice rally today, breaking through hourly and intermediate support levels on charts of Yen pairs. This was the “flight to safety” event, with the Euro and the Commodity Dollars being dumped and this spilled over to other markets. Media stated so many reasons behind these moves, that one can a pick and run with any of them. Best one is “Investors are worried”. So that’s why they are buying the Yen?  The list of real or imagined worries is so long that it could fill a good size fictional novel. Incidentally, most of the articles on the subject feel just like that- works of fiction.

Somebody tried to explain why the British Pound remained relatively strong, even appreciating against some other currencies. Answer… flight to safety. Great, now GBP is a safe haven. Just two weeks ago press was ready to bury the Pound and stage a wake. BTW, right now GBP is ready to break on short term charts, so what will it be tomorrow, increased risk appetite? At the same time the SNB board member Jean-Pierre Danthine stated “Deflationary trends have practically disappeared. We can be satisfied with the results of our monetary policy.” Basically giving a green light to more advance of the CHF, which pushed the Euro to a new all time low of 1.3166. Swiss authorities seem to accommodating here but I think that they will once again intervene when the EUR-CHF drops to 1.3000.

In regards to the Yen pairs, this leg down has been shaping up for some time now. It didn’t come late last week, but it finally arrived today. Most of the crosses built nice, easily identifiable supports, setting up straight forward trades. Both hourly and 4H charts provided good opportunities.

Break under 109.50 was a simple sell signal in EUR-JPY, with 120 pips objective, close to an earlier support not visible on this chart. Move was fast, even if not dramatic, but nice, steady progress in almost straight line. Trade was set and forget, done before the US session.

The AUD-JPY produced two trades, one for 45 pips, the other for 100 pips, also closed before the US open. There was even more downside later in the day, but I was done with these pairs. However, NZD-JPY and CAD-JPY crushed through sell points on 4 charts, and I’m still in those. they will be closed between now and the European open on Wednesday. I’ll discuss them in next update, together with the Swiss Franc situation.

Mike K.