Comments from the Deputy Governor of the Bank of Japan indicated that they are comfortable with continued accommodative financial conditions through low rates and will continue on with this policy until economic data provides conclusive evidence of inflationary pressure. This news put a bid into USD/JPY and triggered our short positions at 112.28.  I have a feeling we might take some heat on this trade, but the technicals are solid and while EUR/USD remains above 1.2885 and EUR/JPY below 145.00, USD/JPY should be able to stay below 112.50.

The 1.2885 EUR/USD level is shown below and could be taken as a long trade. If you are already short USD/JPY, only take this EUR/USD long trade if you want additional short dollar exposure. If not, pass on the trade and watch it as a proxy for USD/JPY.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.