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Forex: As Crisis Fears Ease, USDJPY Primed for Dollar Fade

Forex: As Crisis Fears Ease, USDJPY Primed for Dollar Fade

John Kicklighter, Chief Strategist

Talking Points:

• Fear in the US Government shutdown and Italy political crisis have eased this week

• With the open-ended fundamental threats curbed, the dollar at risk of a breakdown without risk trends

• While there are attractive trade setups for heavy risk, there are also trades for 'premium burn'

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This week's major fundamental threats - the US government shutdown, October Taper, Italian coalition breakdown - have been defused or played down. The diminished 'tail risk' reduces the probability of heavy volatility and major trend changes, but there is still trade opportunity in these outcomes. Of particular interest, the tempered US headlines and volatility threaten to weigh the dollar even further just as the benchmark tests major support. Yet, at the same time, we have fading premium on the euro, pound and yen crosses. In today's video, we discuss the trades around current FX market pressures along with the off-chance risk swell options. In this mix, pairs like USDJPY, GBPUSD and EURUSD are primed.

Find out what event risk can threaten the trade setups discussed in today's video with the DailyFX Economic Calendar.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.