FxWirePro Call Review: USD/JPY short call under threat as Kuroda vows to continue monetary easing

We have been short on USD/JPY for quite some time now. Back in May this year, in an article named, “FxWirePro: Buy yen at dips targeting 101 per dollar”, available at http://www.econotimes.com/FxWirePro-Buy-yen-at-dips-targeting-101-per-dollar-674020 , we suggested buying yen against the dollar, with a target around 101 per dollar. Here is the recommendation from that article, “We recommend buying the yen at dips against the dollar with a target around 101 per dollar. Proffered buying areas are here at 112 (10 percent of the total intended position), then at 114 (20 percent of the total intended position), then at 115 (60 percent of the total intended position) and finally at 116.5 (10 percent of the total intended position). We would recommend stop loss after entering fully into the trade.”

In a subsequent article, named, “FxWirePro Call Review: Maintain USD/JPY short; stop loss recommended”, available at http://www.econotimes.com/FxWirePro-Call-Review-Maintain-USD-JPY-short-stop-loss-recommended-729744 , we noted,

“The yen weakened to as low as 114.3 per dollar before strengthening again. As per our guideline, our readers couldn’t have entered the entire desired positions.  We recommended at this point maintaining the entered positions and add fresh positions at breakouts. An addition of fresh short positions is recommended one the pair break below 110. As of now, we would like to recommend a bigger stop loss around 115.5 per dollar.”

In this article, we would like to issue a red flag to the call. Today, speaking in Tokyo, Bank of Japan (BoJ) governor Haruhiko Kuroda has reiterated central bank’s vow to maintain extraordinary stimulus until inflation moves steadily above its 2 percent target. It shows that the central bank stands ready to be one of the odd mans in a world where major central banks like the European Central Bank (ECB) and the Bank of England (BoE) are looking to cut down stimulus. A lack of risk aversion, BoJ’s vow and marching equities do pose a risk to the call. However, we at FxWirePro are in favour of maintaining our bigger stop loss around 115.5 area.

Our calculations show that there is a risk of bulls pushing the pair towards 117.6 area. The chart shows a formation of a triangle which indicates a breakout ahead.

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