The Japanese Yen had a very nice run over the last couple of day and especially on Friday. Most currencies lost all or most of the recent gains on Yen and the USD-JPY is swiftly approaching the 85 level, which is the major low from last year. Many traders were caught by surprise and are now asking “Why is JPY getting stronger?” One could say that China is diversifying its foreign reserves and buying Japanese bonds, in a quiet but steady manner. Many other reasons, real or imagined, are possible, but today I’ve stumbled on one of the better explanations. Investors who were selling Euro and/or Dollar had to buy something, so they opted for the Yen. There you have it, JPY is getting stronger because people must buy “something”. As good as it gets.

I for one don’t know why it is happening, at least not in a way that would make anybody’s jaw drop. However, the charts have been indicating Yen appreciation, so orders have been lined up with the JPY, to take advantage of the move when it comes. Last post covered a sell order in NZD-JPY, placed at 62.50, looking for a break through that support. Didn’t have to wait long.

The price broke through the sell level, stalled for a couple of hours and resumed the downtrend. My objective was a decent (for the time frame) 80 pips and it was reached reasonably fast. Before the weekend, too, a big plus. Except for the EUR-JPY, all other major crosses had very similar price swings.

Trade from few days ago, in GBP-CHF, didn’t work out as nicely. It was closed at Friday’s close for 34 pips loss. Not much really to add, other than the broad sell off in Swiss Franc did not materialize. However, it did tank against few currencies.

The EUR-CHF, which I covered extensively last week, made an upside move at the same time as the GBP-CHF. Today the Euro got a boost from Chinese comments, on commitment to Eurozone, pushed the common currency higher. This transaction reached its objective of 1.3600. Just before US session it seemed that the advance is stalling, so I closed half of position. Prematurely, as it turns out. On a related matter, the Euro adavance is probably over for now and a correction during next 1-2 weeks is very likely.

The last trade which was discussed on these pages was the GBP-NZD, from the Pound-Kiwi daily chart post. Here the plan was to look for first signs of reversal, expected early in the week. The way candles formed, entry was excellent, with very small risk. My entry was at 2.1081 two days ago and exit at 2.1484, for a nice 400 pips. This pair will probably continue higher, maybe to 2.2100 for this swing. So, why close the position? Simple, I’m taking a break next week, not trading for me at all. Clearing books, of sorts. Have a great weekend!

Mike K.