Best trade this week: Long EUR/JPY

Big moves in the world of FX this week but none bigger than EUR/JPY, which gained 3.1%. The pair had its best week since February and gained +350 pips.

The yen has been the laggard for two weeks in a row and EUR/JPY has gained 700 pips in that time. Last Friday, I showed a similar chart and warned the yen crosses were on the cusp of breaking out.

It’s a beautiful move above the range that has persisted since August and it has broken the 61.8% retracement, which points to an eventual move to 111.44.

Before we get the next leg higher, I expect a retracement back to the old range in order to relieve some overbought conditions. The risk is that the dip is shallow before the climb continues.

Author: Adam Button

Adam Button is the managing editor of ForexLive™. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.

7 Comments

  1. Hi Adam, me short EURO at 1.2955 any luck i can come out on Monday morning?
    pls advice

  2. I missed 4 yen trades this week, 3 f them within 20 pips. And shut my long eur/aud when it dipped in the low 1.23′s before rallying right back up on Thursday night. all I want for Xmas is a nice double bottom in euraud at 1.2150 and a retrace meant in the yen cross pairs before vacation time.

  3. Do you think the Brazilian central bank intervening in the market had anything to do a significant fall I. The dollar and illogical gain in the euro? I don’t recall this being discussed today.
    http://mobile.reuters.com/article/idUSL1E8MN17N20121123?irpc=932

    This type of action on an illiquid day tend to be faded in the next few sessions, placing some shorts at this level could prove profitable?

  4. Harsha, what’s your stop?

  5. Hi,Stop loss 1.3010 for EURO short position,can u pls guide

  6. It’s a reasonable trade but it’s not my bread and butter. I almost always trade with the momentum. I can see a pullback on Monday to 1.2920/25 but it could just as easily go the other way. I know you want something definitive but that’s all I’ve got.

  7. Hey Fellas,

    Are we ready for another wonderful week of trading? :)

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