Forex Trading Recommendations from DailyFX Analysts for the Japanese Yen

Daily Forex Technicals | Written by DailyFX | Sep 24 08 13:54 GMT |

The forex market has been very volatile on speculation the massive $700 billion bailout plan devised by the U.S. Treasury Secretary Paulson will fail to restore confidence on the world's financial system. DailyFX analysts have different opinions regarding the chances of success for this rescue plan which gets reflected in their trade recommendations for the Japanese yen. Chief Strategist - Antonio Sousa My picks: Remain Long AUD/JPY Expertise: Fundamentals and Sentiment. Average Time Frame of Trades: 1 day to 3 months I remain long AUD/JPY since last week and despite the razor-sharp increase in volatility which makes it very difficult to make forecasts, I expect the Australian dollar to rise further against the Japanese yen. Indeed, the demand for high yielding currencies is likely to increase in the weeks ahead since a massive demand for safe assets have sent the yield on U.S. Treasury bills down close to zero which could force investors to search for investment alternatives. Moreover, although no one can be sure that Paulson's plan to buy illiquid mortgage assets from several financial institutions will save the U.S. economy from a technical recession, it's difficult to deny that Paulson's plan is not a good first step to restore confidence in the financial system. Indeed, the measures engineered by the U.S. Federal Reserve to clean the market from some toxic assets could be the first leg of a more general recover in the appetite for risky assets like high yielding currencies. Going forward, lower interest rates could make the Japanese yen less attractive to currency traders and the higher level of demand for bonds and stocks denominated in Australian dollars could accelerate the gains in the AUD/JPY. Senior Currency Strategist - Jamie Saettele My picks: USDJPY short, against 106.90 Expertise: Technical Average Time Frame of Trades: 1 month Don't let the USDJPY lull you to sleep. This is what it does before it makes a major move. The bearish level in the sand is 106.90. Staying below there keeps the short term trend down and potential for the decline to accelerate in a 3rd of a 3rd that will eventually break below 103.52 (and much lower). Confidence in the bearish bias is waning with each passing session though. Currency Strategist - Terri Belkas My picks: Long USD/JPY Expertise: Fundamentals Combined With Technicals Average Time Frame of Trades: 1 - 3 Days Last night's announcement that Warren Buffett would be buying a $5 billion stak in Goldman Sachs has provided a boost to US stock market futures, and with EUR/USD picking up steam, this may be a good opportunity to take a short-term long EUR/JPY position. This is the opposite of my pick from yesterday (which didn't reach my target but did move in the correct direction), as the EUR/JPY bounce from 154.50 last night looks likely to target 157. Currency Analyst - David Rodriguez My picks: Continue selling USD/JPY rallies Expertise: System Trading Average Time Frame of Trades: 2-10 weeks Exactly two weeks ago I signaled my preference for selling USD/JPY rallies, and I continue to maintain that ongoing market volatility will support the Japanese Yen through short-term forex trading. In terms of short-term targets, today's sharp intraday reversal tells me that we are likely to re-test the recent lows near the 104.00 mark. Intraday resistance near 106.37should contain rallies through the near term. Look for other USD/JPY trading signals on our free forex trading signals page. Currency Analyst - Ilya Spivak My picks: Pending Short USDJPY Expertise: Macro Fundamentals, Classic Technical Analysis Average Time Frame of Trades: 1 week - 6 months In recent weeks, we noted that USDJPY could diverge from US dollar strength seen in the other majors with the pair trading in a Rising Wedge formation confirmed by negative divergence with the Slow Stochastic oscillator. Indeed, USDJPY broke below wedge support even as the greenback scored gains across the remainder of the forex spectrum. Current positioning points to near-term support at 104.50 (the July bottom), with resistance at a downward-sloping trend line near 108.00. The pair is now roughly in the middle between these two boundaries, making an entry unfavorable from a risk-reward perspective. Look for a either a pull-up to resistance or a daily close past support to enter short with initial targets in the 102.70-103.00 range. For more details on USDJPY and outlook on the other major pairs, please see the latest Candlestick Weekly Report. Currency Analyst - David Song My picks: Short NZD/JPY Expertise: Fundamentals Combined with Technicals Average Time Frame of Trades: 2 Days - 2 Weeks After falling below 67.50 last week, the NZDJPY has bounced back to hit an intraday high of 74.10 this week. The pair looks to be losing momentum, and I expect the underlying down trend to lead the pair lower over the following week. I anticipate the kiwi-yen to break below 71.75 over the next few days, and may work its way lower to test the 9/16 low of 67.21 for support over the following weeks. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. 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