The latest break back above 0.7200 is somewhat concerning, with the market ending a bout of consolidation and inching closer to some key highs in the 0.7500’s. However, despite the latest surge, we continue to retain a bearish bias and still see the risks for some major declines over the medium-term. The 78.6 fib retracement off of the 2010 high-lows comes in by 0.7300 and we would recommend looking to take advantage of any additional strength towards this level as an opportunity to build an excellent short position. The 200-Day SMA just under 0.7100 is worth looking at, as it has helped to prop setbacks over the past several days, and a close below this longer-term SMA could very well accelerate declines. STRATEGY: SELL @0.7305 FOR AN OPEN OBJECTIVE; STOP 0.7405. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE FRIDAY. POSITION SIZE SHOULD BE 3X TOTAL EQUITY.
The latest break back above 0.7200 is somewhat concerning, with the market ending a bout of consolidation and inching closer to some key highs in the 0.7500’s. However, despite the latest surge, we continue to retain a bearish bias and still see the risks for some major declines over the medium-term. The 78.6 fib retracement off of the 2010 high-lows comes in by 0.7300 and we would recommend looking to take advantage of any additional strength towards this level as an opportunity to build an excellent short position. The 200-Day SMA just under 0.7100 is worth looking at, as it has helped to prop setbacks over the past several days, and a close below this longer-term SMA could very well accelerate declines. STRATEGY: SELL @0.7305 FOR AN OPEN OBJECTIVE; STOP 0.7405. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE FRIDAY. POSITION SIZE SHOULD BE 3X TOTAL EQUITY.
Yesterday, the United States Federal Reserve maintained “the target range for the federal funds rate at 0 to 1/4 percent” continuing to anticipate that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. Judging by the market reaction, the rate announcement seems to have been overshadowed by the problems in Greece. However, the Fed statement should not be ignored, particularly when the Fed sounds more hawkish than usual. “Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve”, the Fed said. Indeed, the Federal Reserve is now expected to increase rates by 75 bps, according to overnight index swaps which measure interest rate expectations for the next twelve months. Eventually, a widening of the interest rate differential between the United States and other countries will help the US dollar, in particular against the Japanese yen. I have been long USD/JPY the currency pair was trading at 86 and I’m targeting 100. Currently, USDJPY trades at 94.15. Still, exchange rate volatility remains relatively high despite news the European Union and the International Monetary Fund will start lending money to debt troubled Greece. Therefore, please make an intelligent use of leverage and always uses stops
