As U.S.-China trade-war rhetoric escalates without any plan for a resumption of negotiations, currency strategists are mapping out foreign-exchange implications.
Bank of America Corp. sees the Japanese yen strengthening as investors flee risky assets, and has recommended an associated euro-yen trade. Goldman Sachs Group Inc. warns that currencies from the euro to South Africa’s rand and Chile’s peso could be in the firing line.
Over at Bank of America, the currency team last week initiated a three-month put spread that takes a short position on the euro-yen currency pair, with the view that investors will be seeking a haven with no quick U.S.-China deal in the offing.
Zach Pandl, Goldman Sachs’s co-head of global FX and EM strategy, said he sees the potential for trade tensions to spill over into currencies including the euro, South African rand and Chilean peso. He sees the euro in particular having downside risks, saying it should head lower in the short term to $1.10, from the current level around $1.1164.
The article went on to discuss shorting the Euro/Jpy forex pair. Lets go to the charts to see if we can find a trade set-up.
Monthly Chart (Curve Time Frame) – monthly supply is 139.00 and the monthly demand is 111.00
Weekly Chart (Trend Timeframe) – the trend is down.
Daily Chart (Entry) – the chart suggests to go short on a pull back to the daily supply at 124.50 with a target at 119.00.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.