83.30 has been breached and stops triggered above 83.35. No follow through thus far. Corporates like to use big technical levels so I’m guessing that the next batch of sell orders will be near the 200-day MA at 83.63.
15 Responses to “USD/JPY breaks through first resistance level”
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AUTOREFRESH 
Hey Sean, My take on the interesting action in usd/chf yesterday: The euro inflation numbers pushed it under 914, but it never closed on the hourlies below there. I’d imagine there’s strong support and resistance at the channel (15 day/hourly) top and bottom, near 927 and 910, just don’t know which one we’ll challenge first so I’m flat the pair and waiting. Any thoughts or market chatter/orders, good sir? All the best,
Hi JR. I had some really good info on it over last two weeks but unfortunately I chose not to trade it. Quite a bit of short covering by longer-term short EUR/CHF players has been a big story over last few weeks but every rally in USD/CHF is still meeting heavy selling. Middle East now seem to favour buying EUR/USD rather than selling USD/CHF, but still lots of sellers despite the fact we’re only 300 pips off major historical lows. I’ve no fresh order info today but I’ll send an email and see what the Swiss guys think
Thanks Sean, I’m thinking that a long trade from 910 or so, with a stop just under 890 and a target of 1.00 could be a decent swing trade. Unless we get a mean bout of risk aversion. Speaking of which, eur/chf seems almost like a put option on the s&p, but without the time decay of options. And the risk markets did have an unnatural ‘window dressing’ bid by mutual funds today at quarter end… and the vix is at 17 so there could be a bit of complacency creeping in. Japan is in the midst of a disaster and western civ appears to be in the midst of a holy war over oil… what could go wrong…
I still think both the Eur and Usd/Chf have some more room to run to the upside. Doubt they’ll break 9200 and 3030 in Asia though but usd/chf I’m looking at 9270 and 9350 and Eur 3070 then 32. Still looks to me like dip buying at least till we see how the data tomorrow comes out.
I can’t sleep if I’m long USD. I wish I could be more objective but try as I might, I can’t bring myself to buy the dollar.
Hi Sean, where do you think its going with EURCHF?
Yeah, the Fed doesn’t want people to be comfortable keeping their dollars under mattresses- they want them flowing near and far throughout the global economy. But just as Col Kilgore said in Apocalypse Now “some day this war is going to end”… some day the zero interest rate policy is going to end. I got a kick out of Bill Gross saying that America was going to outGreek the Greeks. That’s like saying a med student graduate with 200k in student debts has no future. America does have leadership in tech, biotech, agritech. And flexible labor markets. With well trained and hungry workers who don’t mind 60hr workweeks, with four weeks vaca a year, etc. 20 years ago, just after the first bailout/bust scam happened, people thought the us was going to lose its place. There was “The Japan That Can Say No” and all that jazz. And then the business cycle took a turn for the better
You’ll eventually convert me JR
I agree with your points about the US capital system and hunger for innovation, which in the past has been able to attract the world’s leading innovators with a Dollar which was as ‘good as gold’. Unfortunately the US has been let down by the financial masters of the universe who through outrageous greed have undermined the dollar. Its increasing ‘unattractiveness’ will weaken the ability of the US to do what it did in the past
Sean, you are not the only one who can sleep at night, if he is “long USD” at the moment: http://blogs.reuters.com/trnewsmaker/2011/03/31/el-erian-explains-pimcos-u-s-treasury-holdings/
Sean, sorry – El Erian cannot sleep at night, either (emphasis on cannot, of course)!
Re EUR/CHF Nrek: Recent markets are all about flows, whether in AUD, JPY or EUR. EUR/CHF has seen some heavy short-covering over last few weeks by longer-term short positions and I have no reason to believe that these flows are finished yet.
There’s some obvious resistance looming at 13040, 3145 and then 13200. If these levels break, then I’d say the tide may have turned and its time to start buying dips.
Was there ever really a golden age for the us dollar though. Maybe from the mid-50s to mid-60s, according to hollywood, but the history has been the depression, vietnam/lbj, nixon going off the gold standard, the tehran agreement, reaganomics (deficits don’t matter), savings and loan bailout scam, etc. Like Gekko said in Wall St II, people are a mixed bag. And the us has done the big things right. Unlike Japan, we never invaded China. And unlike Russia, we never intended to nuke them! http://www.telegraph.co.uk/news/worldnews/asia/china/7720461/USSR-planned-nuclear-attack-on-China-in-1969.html In a couple of decades the euro and yuan will, hopefully, have earned their place as reserve currencies of equal status. ‘Til then the dollar system isn’t all that bad. It makes commodities a little less expensive when times are bad. I don’t think people would really want to buy their oil with gold right now…
Hey JR, nice to read your comments. I went to grad school in the US and have worked for US tech giants in Asia. My pov is heavily tinged by my Asian experience but I really feel the ground is shifting from under the USD. Of course this is a relatively long term movement, not a tradeable thing. The US qualities of hard work, innovation and fair play/rule of law have broken down in the current generation from about the mid 80′s. The dollar is most definitely not viewed as ‘gold’ as it was until the mid 80s. In fact, the feeling in Asia seems to be that – be prepared to abandon the USD! Everyone will play along as long as things seem to be going okay, but with a finger close to the eject button and alternate plans well laid. Unless Wall st and the Fed (a tautology!) can be reined in, the hardworking, innovating America will suffer. The current administration’s policies and the non-changes since the 2008 crisis most certainly do not inspire confidence that things will get better for the USD.
What are the ‘well laid alternate plans’ out of curiosity? This goes back to the whole ‘secret plans’ to abandon the dollar theme? The carefully laid plans that somehow no one knows about? I spent 12 years working in SE Asia and for the most part unless you are in the top 2% of the population it’s a pretty terrible place to live. Granted the economies are growing, but from what I gathered pretty much only because of western capital and massive populations. If Filipino semiconductor works will eventually command salaries anywhere near what they do in the US, that TI plant will find a home pretty quick back in Texas. I just don’t but the whole Asia rising story. This theme goes on and off for 30 years. I honestly think they’re too late to the game (Aside from Jap/Kor/Twn).
Each concerned person / company / govt will have their plans. Its just obvious from the zeitgeist here that the USD is not as good as gold, as it was thought of in the 80s. As for the Asia rising story, you could have said the same of korea/taiwan back in the 80s, but now they are accepted as ‘developed’. You could say the same of Japan in the late 50s and 60s. And everyone said the same of China since the 80s and 90s and look how it has risen. The rise is inexorable, its just nature balancing out. And when Chinese or Indian salaries reach US levels (by Asia rising and US declining in real terms), sure the decision to locate TI’s plant will be made on other factors. Perhaps to somewhere in Africa, as that is the only large are still lagging behind!