Micro USD/JPY Futures: Capitalizing on USD strength against JPY
Our View
We expect the Yen to remain weak against the USD for the remainder of the year, supporting USD/JPY long positions. We believe the BoJ is more concerned about slipping back into deflation and wants to avoid raising rates until it is certain that sustainable 2% inflation has been achieved- supported by higher wage growth translating into higher spending.
Our outlook is supported by the latest economic data (inflation, wage growth) which appears to be consistent with the BoJ’s assessment that sustainable 2% inflation remains a hurdle, reinforcing the need for maintaining ultra-easy monetary policy.
Expressing Our View
We favour the hypothetical trade setup below in order to express our view.
Long USD/JPY Micro Futures:
We favour taking a long position with entry at the present level of 144.45, target level of 151.00, and stop loss at 141.30. Immediate resistance is sighted around 145, if this level is broken, the contract may head further upwards towards 151.00. This setup delivers a reward: risk ratio of 2.08x.
• Entry Level: Present level of 144.45
• Target Level: 151.00
• Stop Loss Level: 141.30 around 50MA
• Profit at Target: 1519.84
• Loss at Stop: 750
• Reward: Risk Ratio: 2.08x
We expect the Yen to remain weak against the USD for the remainder of the year, supporting USD/JPY long positions. We believe the BoJ is more concerned about slipping back into deflation and wants to avoid raising rates until it is certain that sustainable 2% inflation has been achieved- supported by higher wage growth translating into higher spending.
Our outlook is supported by the latest economic data (inflation, wage growth) which appears to be consistent with the BoJ’s assessment that sustainable 2% inflation remains a hurdle, reinforcing the need for maintaining ultra-easy monetary policy.
Expressing Our View
We favour the hypothetical trade setup below in order to express our view.
Long USD/JPY Micro Futures:
We favour taking a long position with entry at the present level of 144.45, target level of 151.00, and stop loss at 141.30. Immediate resistance is sighted around 145, if this level is broken, the contract may head further upwards towards 151.00. This setup delivers a reward: risk ratio of 2.08x.
• Entry Level: Present level of 144.45
• Target Level: 151.00
• Stop Loss Level: 141.30 around 50MA
• Profit at Target: 1519.84
• Loss at Stop: 750
• Reward: Risk Ratio: 2.08x
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