- During my analysis on Tuesday, I've been paying close attention to this pair. This is mainly due to the fact that we had seen a major risk off type of move early in the session with the Japanese yen picking up quite a bit of strength.
- This might have something to do with the Russians changing their nuclear mandates. As Ukrainians have fired missiles into the deeper parts of Russia.
The Japanese yen strengthened against most things. So did the Swiss Franc. However, that makes this CHF/JPY pair much more interesting and much more important because this will tell you where money's going with the Swiss Franc dropping the way it did against the yen only to turn right back around.
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I think at this point, it's likely to be a situation where the Japanese yen is going to fall against most currencies, especially if the lowly Swiss franc can pick up strength. So, while this may or may not be a trade that you take, it's a very important indicator. What I would point out is we are forming some type of really ugly bullish flag, which could send this pair much higher. That means the Japanese yen might be in serious trouble soon. If this pair were to break above the 176 yen level, then I think it opens up a move to the 177.50 yen level.
If We Fall
On a breakdown below the 50-day EMA, then you have to look for support at the 172.50 yen level, an area that's been important multiple times. Again, you don't necessarily have to trade this pair because the interest rate differential isn't that exciting. It's not like you get paid a lot at the end of every day, but what it does tell you is whether or not if you are looking to take advantage of swap at the end of the session, which of these currencies might be funding most of the carry trade at the moment. So therefore, I find this to be one of the most important charts in the Forex markets that a lot of traders sadly ignore because it tends to chop. But when you get it leaning in one direction, that screams, and in this case, you want to short the yen, not the franc. You can extrapolate that out to the New Zealand dollar, US dollar, Canadian dollar, British pound, or whatever and do quite well.
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