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CHF/JPY Forecast: Swiss Franc Stabilizes Against Japanese Yen

Swiss Franc stabilizes against Japanese Yen despite interest rate cut. Focus on central bank policies and carry trade potential, as the Yen shows weakness.

  • The Swiss franc stabilized a bit against the Japanese yen during the session on Monday, which is a bit of a surprise, but this is a market that you absolutely must be paying attention to.
  • This is mainly due to the fact that both are considered to be funding currencies, and sometimes when a market doesn’t act the way you think it should, that is a huge glaring signal that you should be paying attention to.

CHF/JPY Forecast Today- 26/03: CHF Stabilizes vs JPY (Graph)

Central bank policy

Keep in mind that the Swiss just cut interest rates, and that of course has a detrimental influence on the Swiss franc. However, it has stabilized a bit against the Japanese yen, showing just how lonely the Japanese yen is as far as traders are concerned right now. Ultimately, this is a scenario where a lot of people are going to be paying attention to the potential of a so-called “carry trade”, which of course pays you to hang on to a currency pair at the end of each day. Quite frankly, even though the Swiss franc has seen a cut in interest rates, the fact that the Japanese yen can’t capitalize on this fact tells me that the Japanese yen is in serious trouble.

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    I believe at this point in time the slight interest rate differential probably favors the Swiss franc anyway, but what I look at this chart for is a bit of a determination as to which currency I want to be short of the most right now. Judging from the way this chart is behaving, it is most certainly the Japanese yen. It’s not to say that I won’t short the Swiss franc against other currencies, just that I’m probably going to be much more aggressive in the “/JPY” currency pairs out there at the moment. In fact, I believe this is a situation where I will short both yen denominated pairs and franc denominated ones. Quite frankly, I have no interest in buying either one of these currencies, unless of course it is against the other one. In that case, I would get long of this pair but I also recognize that it will more likely than not be a bit of a grind so you must be prepared for that.

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    Christopher Lewis
    About Christopher Lewis

    Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.


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