GBP/USD Below 1.6200

GBP/USD - Below 1.6200

Well... we were a few days late, but the Pound broke below the 1.6200 level. We don't like the circumstances behind the late move down, as we've seen too much volatility for our strategy to be effective. We still hold to our notion that the USD will continue to gather strength near term. Our longer term outlook is for continuous USD decline.

Looking Back...and Forward

Resistence Broken, Further USD Losses?

Looking back into our last trade, shorting GBP/USD, there was a reason we didn't want to put on a full trade. The potential was there but the market decided on a weakening dollar into the new week. We were stopped out at 1.6485 a session later. Looking into this week, the USD will most likely continue to weaken as we've broken several areas of resistence for the EUR$ and GBP$ pairs.

With a lot of economic data coming out on all fronts, we'll look for a fundamentals moving the market with techs supporting. In observance of Independance Day, Saturday July 4th, U.S. markets are closed Friday. Non-Farm Payrolls will be released Thursday instead. This release will most likely set the trend for the following week.

GBP/USD Short

GBP/USD - Technicals point lower
Short @ 1.6366, Stop @ 1.6485, Open Objective

Looking into tonight's London session, we believe the USD will continue to strengthen. There has been a lot of volatility that threw our technicals off the last few days. We're staying away from exposing our account to too much adverse movements until we see a better set-up; however, we are shorting the GBP/USD overnight- playing the fib retracement off the second shoulder of the recent head and shoulders formation. Our target is open, but a move below 1.6250 will make us move the stop to break even along with some profit taking. A further break below 1.6200 opens up a further slide. Our stop is 15 pips above the shoulders, 1.6485. With no major overnight data from the UK, we expect technicals to either work for us, or keep the price stable within the current range.

USD/JPY - Updated - 99.90 High

USD/JPY - Where to Next?

Just a quick update - the Yen continued to lose ground vs. the majors. USD/JPY hit a high of 99.90 before retreating. I'm currently neutral at these levels, though I think another run at 100 is possible.

USD/JPY - Selling of Yen Assets Continue

USD/JPY - Positive Outlook - 100 Mark?

I think we'll continue to see a move towards the 100 mark into the next 48 hours. Tech studies looking good. Fundamental data supports. Equities up.

******DailyFX Plus Article - Japanese Buyers Of Foreign Assets, Foreigners Sell Japan Tokyo, April 2. MoF flow data for the week-ended March 28 show recent trends intact. Japanese were net buyers of foreign assets during the period and foreign investors were, by and large, net sellers of Japanese assets.

Japanese bought a net Y246.4 bln in foreign stocks, Y663.1 bln in foreign bonds and a net Y21.4 bln in foreign bills. Flows in and out of foreign bonds continued to be heavy with Y1.9819 trln in sales against Y2.6451 bln in purchases. Anecdotal evidence suggests Japanese interest in foreign assets continued after the above period with flows noted from Japanese investors early this week and into the new Japanese fiscal year. Institutional investors look to be returning to foreign bonds with most JPY pairs looking to have bottomed in Q1 of "09. Retail investors, for their part, look to invest afresh in foreign assets with quite a few redemptions already having taken place and on the back of more redemptions at the start of the Japanese fiscal year. Though more picky than in the past, demand is still expected from the retail community and into the summer bonus season, though bonuses will definitely be much smaller this year (if paid out at all by some firms, especially manufacturers).

On the other side of the ledger, foreign investors sold the gamut of Japanese assets. They sold a net Y189.7 bln in Japanese stocks, Y719.8 bln in Japanese bonds and a net Y1.3753 bln in shorter-term Japanese securities. All were on heavy volume. Stocks saw purchases of Y3.0631 trln against sales of Y3.2528 trln, bonds saw purchases of Y1.0231 trln against sales of Y1.7429 trln and shorter-term bills saw purchases of Y1.8769 trln against sales of Y3.2521 trln. --Haruya.Ida@thomsonreuters.com******