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Long USD JPY for 2010

Long USD/JPY Could Be Trade of the Year 2010

Well, 2010 is here and from what we can see going long USD/JPY could be the trade of the year. We would never claim to be sure of anything when it comes to the FX markets, but USD/JPY looks like a good bet this year for forex brokers from our vantage point.

The dollar has been appreciating nicely through the end of 2009 against both the Euro and the Yen. What's more, it's in Japan's interest to see the Yen depreciate. If the dollar's moving up, and the Yen's moving down, then guess what's moving up steeply and steadily?


Here's a breakdown of why this is, as of now, one of our favorite forex tips for 2010:

Changing China

The Chinese Yuan does not trade on the forex markets, but you better believe that Chinese money makes a humongous difference in setting forex exchange rates worldwide. Recently, Chinese economic powers-that-be have hinted at a changing Chinese investment strategy.

Could China be ready to let its currency appreciate? Maybe so.
As consumers in China enter the middle class, they will want to buy goods from other countries, rather than solely exporting goods to other countries. We have already seen a confirmation of this buying mood in December's release of consumer spending in China; it's up.

In order for new Chinese entrants into the middle class to have sufficient purchasing power, China will be forced to allow the Yuan to appreciate.

If this appreciation happens, it would spell a total reversal from China's longstanding strategy of maintaining its currency at an artificially low value so as to spur exports.
What does China's Yuan have to do with the Japanese Yen?

Japan Wants Its Crown Back

Anyone who doubts the export prowess of Japan has not studied the history of this legendary set of islands. Surely Japanese exporters would be happy to see the Yuan appreciate in value at the same time as the Yen was depreciating in value.
In that way, Japan could potentially regain a portion of the market share overtaken by China over the last ten years. Especially if the U.S. economy recovers robustly, you can expect with a certainty that Japanese exporters will be pursuing that business with a vengeance.

If the Bank of Japan or the major fund buyers for Japanese pensions sign off on the desires of the Japanese business community, the downward momentum for the Yen could be forceful. China overtook Japan as the world's biggest exporter. But don't count out Japan.

The most potent weapon to regain that crown is a devalued Yen. Prediction: USD/JPY to Strike 126 in June of 2010
If you have not yet visited Dr. S. Sivaramen over at, you may want to take that trip. Dr. Sivaramen has developed a proprietary algorithm that has enjoyed stellar success over the past few years predicting currency trends. Guy's a genius.

Dr. Sivaramen's currency trading prediction algorithm, as well as his market philosophy, is anchored in the belief that "big players" move the currency markets deliberately and with somewhat obvious motivations in mind. "It is written," says the doctor.
In this case, Sivarament averst that the big players have "written" a cheaper Yen. Sivaramen projects a USD/JPY high of 126 in June of 2010.

At this writing, we're at 93.09.

Happy New Year

Currency trading involves significant risk of less, and so on and so forth. Thoroughly evaluate the charts before you enter this trade or any other trade.

Also, very importantly, be careful not to oversize your position--the big players should make several runs throughout the next six months to "stop out" the retail crowd by forcing margin calls. Buying smart, as ever, is essential.

Still we offer you a simple gift: the idea of going long USD/JPY for 2010, until the pair hits 112 or higher. Happy New Year, friend, and may it be a profitable one for you.

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