Sterling Enters Consolidation Phase

Yesterday I closed my long euro position when it hit above the 1.1820 level. The support line currently holds at 1.1750 and only at this level, I will be looking to long again.

In the mean time, Sterling has dramatically rallied from 2-year lows of 1.7049 to trade at 1.7240 at this point, hitting earlier highs of 1.7338. Cable is in price consolidation mode and should dip back into 1.7170 - 1.7200 region. A sustained closing price above 1.7205 level for this week should set off a further rally to 1.7400.

Buy Eur/Usd at Dip

In a reaction to FOMC statement, Euro broke short-term bearish trend to trade as high as 1.1855 rallying from a low of 1.1685 and it is now settling at just below 1.1800 level. The market has so far been kind to me over the last two sessions as I managed to execute some good trades at price pullback. I am going to reenter (long) only if I see the price drops below 1.1760. Else do nothing and don't be tempted. The market always get you to think in the wrong direction.

Related entries:
Trade of the day: Euro

The Story of Yen

Japanese Yen continues to fell against USD dollar to a 2 year low. While the Yen slips lower and the Nikkei climbs higher, it seems that senior policy-makers in Japan are sending mixed messages related to monetary policy. How to make sense of the current situation?

Adam recounts:

Economists have turned to data on international capital flows in attempting to explain the weakness of Asian currencies. They believe rising US interest rates combined with the perceived stability of US capital markets are driving risk-averse investors, especially those in Asia, to shift capital into the US, which has generated massive demand for USD.

It is difficult to think of something that could stop the current trend of yen weakness and the Japanese officials aren't concerned about the fall in yen. There is a high possibility for traders to chase the dollar even higher as there is no clear sign on the charts for a correction soon in the usd dollar's bull run.