My picks: Long USD/JPY @ 96.05 Limit
Expertise: Global Macro
Average Time Frame of Trades: 1 week
Over the last two weeks, the U.S. dollar exchange rate has been under a heavy selling pressure. For instance, the USD/JPY gave back a big chunk of its 2009 gains and the EUR/USD rose above 1.32 for the first time in 2 weeks. To some extent, many investors believe that higher yielding currencies, stocks and commodities are now oversold and many traders have been chasing opportunities to ride an uptrend on riskier assets. However, the world economy is still in a terrible shape and even though there are some reasons to be optimistic, the current uptrend may just be a wave of profit-taking in a long-term bear market. That said, I expect the safe-haven U.S. dollar to continue to outperform well against the Japanese yen on speculation the export-dependent economy of Japan is more vulnerable to the current slump in global demand.
