CHF/JPY Forecast Today - 04/06: CHF Rallies Vs JPY (Chart)

(MENAFN- Daily Forex)

  • The Swiss franc has rallied again during the trading session on Monday as we continue to see a lot of negativity when it comes to the Japanese yen.

It's worth noting that the Swiss franc has rallied against almost everything, not just against the Japanese yen so this all ties together quite nicely. With that being the case, I think we continue to see upward pressure, but given enough time I also anticipate that we will eventually break out and have more of a“buy-and-hold” type of trade.

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A couple of funding currencies

I believe at this point in time you are looking at one of the most important charts in the Forex world, because both of these are currencies that people generally look at as funding currencies for carry trades. As both economies offer almost nothing in the way of interest rates, it makes sense that this is a fight between 2 major weaklings. With that being said, one of the best things about this chart is it can tell you exactly what you wish to sell, at least in order to take advantage of interest rate differentials. In other words, in this environment you are looking to short the Japanese yen against almost everything, although the Swiss franc is a very weak currency as well. It's just saying that the shorting of the Japanese yen will give you more“bang for your buck” in this environment.

Underneath, see the ¥171.50 level as an area of support, followed by the ¥171 level where the 50-Day EMA currently resides. With that being said, the market is likely to continue to be more or less a“buy on the dips” market, as you do get a little bit of a positive swap at the end of the day, but really what I look at this chart for is to determine whether or not the Japanese yen is starting to really selloff. If that's going to be the case, then I find that I make more money in a pair like NZD/JPY than this one. That doesn't make this chart useless, and in fact I would say this is a very important indicator.

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