Correlation between the US dollar and the Japanese Yen.

The forex week began with a weakening of the US dollar: it lost ground to all the currencies, except the Yen.  

Since two months ago, the forex market has seen a correlation between the US dollar and the Japanese Yen. Whenever the dollar becomes stronger, the Yen beats everybody else, including the dollar. And vice versa i.e.  - when the dollar weakens, the Yen weakens even more. This happened on the last Non Farm Payrolls announcement, it happens now.  

On weekend, the fears that the Chinese Prime minister Wen Jiabao expressed regarding the US debt, triggered a fast response from President Obama. Obama wants to spend more money, thus print it out. 

This money printing devalues the dollar. 

The main economic data being released today is the TIC Long-Term Purchases, which shows the money flow. It’s expected to stand at 44.3 billion, more than 34.8 billion last month.

Instead, the TIC flows showed a large net outflow from the US in January. $43 bln in long-term US securities were sold in January and a net $148.9 bln was sold including bills. This is not USD friendly data and will whip up fears that the US is having trouble funding the deficits.  

Technically by 7:45 am New York time (11:45 GMT), USDJPY cross reached the fibo extension of 127% at point A  and the next candle was a reversal engulfing candle. The high point at A touched the green line of centre-of-gravity indicator indicating a toppish level. Before the TIC data being released, the market has indicated a bearish US Dollar. (refer to the 15 MTF chart of USDJPY below).

My scalp trade start at  12:00 GMT, with a bearish stance. Refer to  1 MTF chart below.  Take a short position with a sell signal of BS and LCD (the first aqua triangle). Close my position at 200 period ema support. 

My second entry is for long at positive MACD and the blue lag move above 15. Price is moving above green centre-of-gravity indicator (COG) , a reversal for bullish. Target price at 61.8 – 76.4% retracement or  the top of COG. With the two position I achieved my target profit of 30 pips.