EUR/JPY
I was tempted to put Trump's twitter feed up as chart of the day here, since he arguably gave the best trade for the end of last week, giving a heads up on an excellent US jobs report. Adam detailed that 'Trump Twitter trade here'. Stocks surged on the news and some of that has followed through to the asian session today with the Nikkei up over 1% so far from the overnight Asian session. Now, normally we would just go with that flow, but the rhetoric around the US and the ongoing 'trade war' with the US, China, Europe, Canada and Mexico is unsettling.
Also, the political woes with Italy and the EU , although having receded, can re-emerge at any time. The new Italian finance minister stated that 'no-one wants a Euro exit. However, as Justin pointed out, arguably the Italian political woes are just beginning. The picture is far from clear.
So, markets are very finally balanced and in this environment we could quickly move to a risk off environment if any one of a number of concerns raise their head. If we do, one chart to have on your radar is the EUR/JPY chart. Price is approaching 61.8% of the last leg lower on the daily chart. Price is also in place to form a bearish divergence on the daily chart should JPY rapidly strengthen in a flight to JPY safety. So, this is not a trade to enter for now, but one to watch in case risk turns 'on' during the sessions ahead in Europe or the US. Watch out for return to risk. The market has, so far, ignored the trade talks spats. But if they continue , Mr Market, should response eventually.
