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Trade of the Day: Guggenheim CurrencyShares Japanese (NYSEARCA:FXY)

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We’ve opened a new bullish trade on CurrencyShares Japanese Yen Trust (FXY). The Japanese yen (JPY) has been gaining significant strength against the U.S. dollar (USD) since February and, after consolidating for the past two months, we anticipate the strengthening is about to resume.

During the past two years, the balance of strength between the JPY and the USD has become distorted because the Bank of Japan (BOJ) has had the pedal to the metal with regard to its quantitative-easing (QE) policy, while the Federal Open Market Committee (FOMC) has been reversing course with its monetary policy. This pushed the value of the JPY lower and the value of the USD higher.

However, now that the BOJ appears to be losing control of its easy monetary policy narrative at the same time the FOMC is scaling back expectations for future rate hikes, the balance seems to be shifting back.

We expect FXY to break out of its consolidation range between $85 and $87 and move back up toward $89 — the support level the fund hit in October 2014. This bullish $2 move would be equal to the height of the current consolidation pattern, and we don’t expect it will take too long  for FXY to get there. Here’s how to trade it:

‘Buy to open’ the FXY May 89 Calls (FXY160520C00089000) at current levels.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/04/trade-of-the-day-guggenheim-currencyshares-japanese-nysearca-fxy/.

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