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The Swiss franc initially fell against the Japanese yen during the trading session on Wednesday but has turned around quite nicely as the 50-day EMA continues to offer a little bit of support. In fact, when you look at Japanese yen related pairs, over the last three days, we've seen an attempt to fall only to turn around and show signs of life.
Because of this, think you have a situation where the Japanese yen may be reaching the end of its peak, at least temporarily, and we may see other currencies start to step up. The reason I pay such attention to the Swiss franc against the Japanese yen is because it can tell me which one of these two funding currencies might be the best thing to short against other currencies. For example, in a situation where the Swiss franc is starting to climb against the Japanese yen, I might choose to buy New Zealand dollar Japanese yen pair instead of New Zealand dollar Swiss franc. It's a little bit more complicated than that, but this is the first place I look at because it gives me an idea as to which one of these two currencies are likely to be weaker than the other against other currencies.
Triangulation
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This is a process called triangulation, and the Swiss yen pair is without a doubt one of my favorite charts to look. As a side note, you can also use the Australian dollar against the New Zealand dollar and the euro against the British pound to do very similar things when trading the US dollar. So, with that being said, this tells me that the Swiss franc is starting to pick up a little bit of strength or perhaps more importantly, the Japanese yen is starting to lose some. The 171 yen level above being broken to the upside, we'd probably see the Japanese yen get smoked by about everything. And I think it could send the Swiss franc to the 173 yen level.
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