By: Andrew Keene
Recent movement in the FXY appears to be a dead cat bounce so expect to see further selling pressure at the 113 level. The recent bounce is FXY's time moving upward for two consecutive days since December 20 and is bound to be headed lower.
Incoming prime minister Shinzo Abe has been very vocal in his call for measures to target 2% inflation, and a forthcoming policy accord reportedly includes job growth targets as well as inflationary ones.
The Bank of Japan is evaluating a revision of its current 1% inflationary target this month after easing monetary policy five times in 2012. The likely outcome will be further easing as the central bank seeks to print their way out of the deflation miring the past decade.
My Trade: Buying the FXY Feb 112-109 Bear Put Spread for $.85 Debit
Risk: $85 per 1 lot
Reward: $215 per 1 lot
Breakeven: $111.15