Forex Trading ResourcesResources

Japan saw a downgrade in its credit rating, but the forex market barely registered it. Indeed, the yen is gaining in forex trading on the currency market. (Likely to the chagrin of Japanese leaders.)

U.S. dollar index is down today as the currency struggles against the euro in forex trading, and as forex traders keep things rangebound ahead of Friday’s central banker symposium in Jackson Hole.

While some are hoping for some marvelous announcement from Ben Bernanke regarding QE3, others are fairly sure that such an announcement won’t come. At any rate, the yen and the euro are both higher in forex trading, despite disappointing news coming out of both areas. 

On a correlation-weighted basis, the Japanese Yen has been one of the world’s weakest performing currencies in 2011. Alas, while this information is interesting for theoretical purposes, it is of little concern to traders, who focus instead on individual pairs. Against the dollar (USDJPY), the Japanese yen is still quite strong, having recovered most of the losses inflicted upon it by the coordinated G7 intervention in March. Does the yen deserve such a lofty valuation? No. Will it continue to remain strong as the dollar? Well, that is a different question altogether.

As a fundamental analyst, I am inclined to look at the data before making a determination on whether a particular currency will rise or fall. In this case, the fundamentals underlying the yen are beyond abysmal. The recent release of Q1 GDP showed a 3.7% contraction in GDP. Thanks to an interminable streak of weak growth combined with deflation, Japan’s nominal GDP is incredibly the same as it was in 1996!

Full article…

…long title but it describes my morning ForexAM show today perfectly. I outline the details of my two recent EUR/USD trades as well as how I use the yen (versus the dollar and euro) to discover whether the Dow or the U.S. Dollar is the market driver. And I also briefly discuss Directional Bias to show how I ruled out a 60-minute EUR/USD swing buy.

– Watch how a fade “fail” led me to a trend-following swing buy on the daily EUR/USD

and

- How by using the daily chart’s “overall” Directional Bias kept me from a 60-minute EUR/USD swing BUY!

– How I use the USD/JPY and a Dow Jones and U.S. Dollar chart overlay to discover what’s driving market psychology

I outline these ideas and strategies step-by-step.

Full article…

It was only a few weeks ago that I last wrote about the possibility of intervention on behalf of the Japanese Yen, and frankly, not a whole lot has changed since then. On the other hand, the Japanese Yen has continued to appreciate, the Japanese economy has continued to deteriorate, and the Bank of Japan has continued to ratchet up its rhetoric. In short, whereas intervention once loomed as a distant prospect, it has now become a very real possibility

Last week, the Yen touched touched 84.73 (against the Dollar), the strongest level since July 1995. In the year-to-date, it has appreciated 10%. There are a handful of analysts, including the anointed Mr. Yen, who believe that the Yen will rise past its all-time high of 79.75, recorded in April 1995. At the same time, analysts caution that Yen strength is better interpreted as Dollar weakness, and that its overall performance is much less impressive: ” ‘Against a broader range of currencies, particularly in real terms, the yen is far less strong than it looks against the US$ in isolation.’ ”

As the global economic recovery has faded, so has investor appetite for risk.

Full article…