A Quick Currency Update

USDJPY Daily 300513Good morning; I hope that the day is proceeding well. Just a couple of quick notes; USD/JPY, on the back of another challenging session for Japanese equities, weakened, reaching a low of 100.61. The proximity to “par”, as it’s called (even though it obviously isn’t) has raised expectations for a test of the 100 level. Most of the Yen specialists to whom I speak are skeptical; they are respectful of the determination of the Abe administration to keep USD/JPY relatively elevated, and of the tools that the Ministry of Finance and the Bank of Japan have available to punish those positioned against them. I suspect that a break of 100 would involve a loss of face that the new administration is determined to avoid. Even if the 100 level was to give way, I’d be looking for places to go long in anticipation of strong action by the MOF rather than chasing the break. 

EURUSD Daily 300513EUR/USD has been moving higher, more because the Dollar has been generally weaker than because of any particular enthusiasm for the Euro.There haven’t been any recent disasters, however, and there has been ample opportunity for those short of EUR/USD to take profits. I have to admit that it has the feel of a currency pair that is set on moving higher. I would be a very reluctant buyer of EUR/USD here, but if compelled to choose, I’d rather buy it than sell it at current levels. It’s even possible that the pair has put in a higher low.  A move above 1.3075 would suggest that a new (up) trend is being formed. 

GBPUSD Daily 300513

GBP/USD is getting into selling territory, it seems to me; this is a case where the move seems to be much more a case of a weaker Dollar than of Sterling strength. Something above 1.5240 looks like a reasonable entry point for a short trade, with a move above 1.5380 a signal to exit. I’d be looking to take profits around 1.5050. The 1.5013 level has been the recent low, but it’s been down there a few times in recent days. A break would be fun, but I don’t care to predict those. If we do see a new trading range, with something around 1.50 the top,  there should be time to get involved, as I would expect price action to chop around for a while. I’d be surprised if that occurred, but my capacity for surprise helps to keep me youthful, if not young. 

I have no positions in any of these at present. 

Best of luck.  

About the Author kevin


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