The Japanese yen keeps getting harder and harder to trade. The direct consequence that we are seeing because of this is that many of the many financial institutions like the Bank of New York Mellon Corp. are simply abstaining from taking out any new positions that include the yen. JPMorgan Chase has also commented that they are seeing individual traders facing a lot of difficulty with deciding which direction to trade the yen against the U.S. dollar. This is happening because of wild swings within the yen’s price chart. Furthermore, these swings are occurring in a range that is just narrow enough to make speculation on positions not worthwhile for most traders.
The yen is not the only currency impacted here. Much of the paralysis that we see is happening because of the unpredictability coming from central banks around the world. And while the Bank of Japan is one of the harder to predict organizations in the world, the European Central Bank and the Federal Reserve are also adding to the uncertainty. However, thanks to the fact that the yen has already been range bound for a prolonged period of time, the yen is the currency that is being hit the hardest in this particular situation. It’s made many currency traders look elsewhere for trading opportunities, especially as easier profits can be found without too much extra effort.
Forex traders have a slight advantage over binary options traders in this particular scenario, but only with certain stipulations in place. For one, strict stop-loss measures need to be determined and efficiently implemented. The stop-loss measures need to be tight enough that things do not get out of control, but loose enough that the range bound asset has room to grow enough to overcome the spread. This can be difficult to evaluate, but the potential for steady gains is worth spending even a few hours figuring things out as exactly as possible.
All of this uncertainty and indecision comes ahead of the September 21st policy decision that Bank of Japan Governor Kuroda is expected to make. There’s no clear consensus on what will occur. Some analysts believe there will be a rate hike, others a cut. Many others believe that rates will stay stationary. Add to this confusion the fact that the BoJ has often made surprise moves in the past. In other words, absolutely no one really knows what to expect in the coming days.
What is certain is that when a move occurs, the markets will react. Understanding how a move will impact the currency’s movement against other currencies is a must. This is true for both Forex traders and those that just focus on binary options. This event has the potential to have a profound impact on prices—at least over the very short term—and if you are able to trade this opportunity, knowing how market psychology is likely to move prices is going to be a big help to you.
Whatever you do, don’t forget that the Federal Reserve is expected to make a decision on interest rates just a few hours after the BoJ decision is to be made public. This creates a lot of focus on both the JPY and the USD, and there’s even the potential for this pair to become extremely easy to predict. It’s very important to keep your eyes on this pair of events and get ready to either trade it heavily, or even to stay away from it completely if things stay uncertain. Pretty much all of the major currency traders out there will be watching this, and just the event itself will move prices. You need to watch it too.