October 19, 2022

Best Currency to Short

Michael J. Donoghue
Best Currency to Short

There is a near endless cycle of global economic news worth focusing on. Recent noteworthy stories include the complete abandonment of UK PM Truss’ ill-timed signature tax cuts, as well as the US Dollar Index briefly falling during better-than-expected US corporate earnings. Just this morning, both UK and Canadian CPI data came in hotter than what was forecast. However, one currency continues to stand out as particularly worth watching, despite few policy updates or other fundamental catalysts this week: the Japanese Yen. With Japan’s economy in a comfortable state of low unemployment and higher consumer spending, yet little dangerous overheating, the Bank of Japan continues its ultraloose monetary policy, voluntarily sacrificing JPY’s forex value for economic prosperity. With the Yen thus continuing its fall to multidecade lows, this bearish momentum shows no signs of stopping, potentially making JPY the best currency to short.

Best Pairs to Buy

According to the EdgeFinder, A1 Trading’s market scanner that assists traders by consolidating and presenting key market analysis, the following three pairs are rated favorably for those shorting JPY. They are listed below with their respective ratings, signals/biases, and corresponding charts.

Regarding technical analysis, each pair has a clear, strong uptrend. As conveyed in the EdgeFinder charts, despite Japan's fantastic economic performance, institutional bearishness (see 'COT data' in the Sentiment category) on the Yen, trend reading, and interest rate divergence are recurring bullish themes across pairs.

1) USD/JPY (Receives a 4, or ‘Buy’ Signal)

Best Currency to Short
Best Currency to Short

2) CHF/JPY (Receives a 4, or ‘Buy’ Signal)

Best Currency to Short
Best Currency to Short

3) NZD/JPY (Receives a 3, or ‘Buy’ Signal)

Best Currency to Short
Best Currency to Short

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