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Ranking Dollar and Yen Options Against Yellen and Risk Scenarios

Ranking Dollar and Yen Options Against Yellen and Risk Scenarios

Talking Points:

  • The intense pressure of a 'risk' move eased with this week's equity rally, but there is still short-term potential
  • Yen crosses are my preference for a sentiment shift with GBP/JPY and AUD/JPY options for contrasting outcomes
  • Fed Chairwoman Yellen is due to speak Friday but will it motivate a short-term Dollar with key setups forming?

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With the cooling of the Dollar's multi-week rally and the bounce from Global equities have pushed back the threat/promise of heavy moves. And yet, there are still plenty of tactical opportunities to be found in the FX market.

For the USDollar, the transition from impressive trend to exceptionally tight range this week set the stage for an asymmetrical progress. A bullish break would have forged bullish ambitions at critical levels for pairs like the EUR/USD. The slip we've seen instead shifts the focus to the short-term; but EUR/USD, GBP/USD and AUD/USD offer appealing options in that context.

For sentiment currents, the rebound among US equity indexes stalled leaving many 'risk-oriented' assets with noteworthy, short-term technical potential. Amongst the Yen crosses, I'm particularly partial to GBP/JPY for any bearish developments and AUD/JPY for a bullish pressure. Besides these two key themes, we weigh in on the Brexit countdown's influence on the Pound as well as gold and oil conviction in today's Trading Video.

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