Currency intervention in the yen and franc, will it work?

Market Pulse: Aug 8, 2011

Last week the September yen opened at 1.2930, had a weekly high on Monday at 1.3113, low at 1.2467 (the day the Bank of Japan (BOJ) announced intervention), and closed the week on Friday at 1.2755. You can see from the daily chart below that Friday’s S&P downgrade is causing strength in the yen, something I am sure the BOJ is not happy with. The technicals on the daily chart did show chart damage with the Thursday announcement. ADX fell from above 60 to 52, still a strong trending market, MACD crossed down below the signal line but we do not see major divergence, and Stocahstics corrected from overbought territory.

In the Swiss franc, the government announced drops in interest rates this past Wednesday to lower the franc. This past week the franc opened at 1.2606, had a weekly high on Friday of 1.3206, low on Monday at 1.2582 and closed the week at 1.3048. No major effect showing from the drop in rates. Looking at the daily chart below we see that ADX is at 64 (very strong trend), MACD is bullish and Stochastics are overbought. You can also see where Trends in Futures went long this market, nice trade.

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