AUTOREFRESH 
I’m struggling to buy into this risk-aversion trade
12 months ago at the height of the global financial crisis, when worldwide stockmarkets were on their knees, EUR/JPY which is the main risk-aversion magnet in the FX market, was trading around 118. Somebody who follows the stockmarket closer than I will be able to say exactly, but I do know that the S&P has risen a lot since then (50% or even a bit more?). Ok, the S&P has now turned lower but does this justify having the EUR/JPY cross at 122? Somehow I don’t think so and this whole Greek episode feels to me like the market getting over excited or over aggressive on a story which just doesn’t justify it. In other words, I think the market is chasing something which isn’t there and once it starts trying to get off this trade there will be an almighty spike and EUR/JPY will be back close to 140 again. (But I have been wrong before).
sorry I haven’t really been sending you articles, I’m actively trading a lot more when...
Fortune favors the bold
Now you’ve gone and scared me Sean…
OOps, sry Alexander. I’m bored and having a rant!!
I think either trade is pretty good right now, upside or down…. which one to take is the pain in the…. two part email Sean
You know both directions are good trades right now because I figure both allow for tight stops and better position size depending on how you feel. The upside has a pretty good gap that is safe to say is no-man’s land for shorts.
I am totally with you on this one. the yen has no business being this strong … not against the usd nor the euro. but sometimes it takes the market a while to figure that out.
thank god i don’t trade my believes. too much pain if you don’t have really deep pockets
Let’s all make sure we have a good, safe, fun time. They say it can stay illogical longer than we can stay solvent, right?
Fundamentally I can’t get my head around it but technically the chart says EURJPY tests 112 and USDJPY 79.75 to me.
South Korea January Producer Prices up 0.7% vs 0.5% rise last month and January PPI up 2.8% (YoY) vs 1.8% increase in December
Things rise too high and then fall too low. Look at the 20yr chart of aud/usd. It was in a 50-80 range: maybe it should be in a 60-90 range now that we’re in a commodity supercycle as China and India build cities, but 98 was ridiculous. When it gets back up there, I have every intention of riding that double top down to 75. As for the eur/jpy, it broke a long-term 127-139 range. That implies a big move down. And eur/usd is still trading above fair value, not even taking into consideration the structural weakness of the euro. I agree this is a boring market: but that’s what patience and discipline are all about, waiting for a good trade. Hopefully the market will make a move one way or another and give an opportunity to either short the euro after a rally (1.374, 123.3) or buy the aussie on a dip (857, 76.3). By the way, aud/jpy has found support for the last six months at 76.2ish. If that level doesn’t hold, then it’ll probably breakdown. And that might be the proverbial canary in the coal mine. On the other hand, if aud/usd tests .873 and can’t make it above that may be a sign that euro won’t break 1.375 either. Anyhow, here’s to hoping that something moves us out of the middle of these ranges…
Yes Nicola, I can’t disagree just yet as the charts do indeed look very bearish. Although if EUR/JPY can start posting a number of closes above the previous pivot at 120 then I’ll make an argument that a major bottom is in place at 112.10. If the pair breaks cleanly below 119 then I give up and go with the market.
Well I agree with you totally, the market got oversold with the USD and this was a good excuse to take profits and try the downside !! we are almost there and as you say get ready for the signal ” oh its not that bad” and the whole bloody thing goes back the other way , profits nicely in the bag. China tightening another excuse, can you imagine how many would be wetting their pants if they did nothing , addressing the problem with a little hiking here and there is the right thing todo .
Logically, I agree with Sean. However, the markets are rarely logical.
I favour the upside its looks exhausted
Still some decent offers at 13715/20 Simon and there’s a big barrier at 13550 which might still get tested.
Sean,
The lowest EUR/JPY was 112 and on closing basis the lowest was 113.80′s. But eur/jpy recovered before S&P recovered. So it might mean that EUR/JPY is indeed FX market risk aversion measurement and reacts much earlier then S&P. So there may be some more down side to the market. When it is time to recover EUR/JPY might recover before others.
Thanks George. I purposely ignored the 112 stuff as that was the spike when the market was in meltdown. The consolidation then between 116/120 was to decide whether it had gone too far or not, and the answer was obviously yes as we then saw the rally. What I’m trying to say is that if the S&P has turned after a 50% rally, then I’d be happy to sell EUR/JPY if it was at 145/150 but not at 122. Yes the FX market looks like it has moved early and perhaps prematurely. Time alone will tell. Thanks again for your views.