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Forex pairs in this Article » EUR/USD, GBP/USD, USD/JPY
- Japanese Yen falls sharply and remains our forex trading focus- Our Momentum2 strategy has done well selling JPY, we believe it can continue- Low forex volatility prices suggests US Dollar could remain otherwise range-bound

The Japanese Yen continues to tumble versus major forex counterparts, and oursentiment-based trading strategies remain well-positioned to sell into JPY weakness.

Last week we wrote much the same: the Japanese Yen remains our focus given its sharp downtrend. And indeed our FX sentiment-based Momentum2 trading system has sold aggressively into further declines. Our Senior Market Strategist remains in favor of further USDJPY strength as long as it remains above ¥99.65. What of other currencies?

The US Dollar looks to weaken against the high-flying British Pound. Yet important downtrends in the Australian Dollar, Canadian Dollar, and New Zealand Dollar versus the US currency give us an admittedly mixed outlook on the Greenback itself. Outside of the Japanese Yen pairs, major currencies could stick to relatively narrow trading ranges.

To that end it’s worth noting that forex volatility prices are up noticeably from last week—particularly as Friday promises sharp USD moves on a highly-anticipated US Nonfarm Payrolls report. Yet we’ll need to see a more sustained move in vols to materially change our Dollar outlook.

Forex Volatility Prices Rise ahead of US Nonfarm Payrolls Report but Remain Relatively Low

forex_trading_strategy_favors_selling_JPY_body_Picture_1.png, Japanese Yen Remains Our Top Forex Trade in the Week AheadSource: OTC FX Options Prices from Bloomberg; DailyFX Calculations

We continue to favor our range-trading Range2 system on the Euro/US Dollar and US Dollar/Swiss Franc, while the Momentum2 system is our preference on the Japanese Yen and several commodity bloc pairs.

See full detail on our trading biases in the table below, and sign up for e-mail updates via my distribution list for any changes.

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

forex_trading_strategy_favors_selling_JPY_body_Picture_2.png, Japanese Yen Remains Our Top Forex Trade in the Week Aheadforex_trading_strategy_favors_selling_JPY_body_Picture_3.png, Japanese Yen Remains Our Top Forex Trade in the Week AheadAutomate our SSI-based trading strategies via Mirror Trader free of charge

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