Gloomy prospects for the sub-prime mortgage market in the US continue to give the jitters to currency traders, with the US dollar trading lower across the board against the major currencies. However, some increased volatility on the Yen has created a buying opportunity for greenbacks, as the US Dollar to Japanese Yen rate fell back to 120.80, a level traders see as a key support on the downside.

James Hughes, market analyst at CMC Markets, says: ‘The 120.80 level on the downside is an important level, which has been underpinning the market since mid May. Many are forecasting a bounce from this level to the 124.00 mark.’

The CFD house advises to buy in on the way up, as the price bounces off of the key support level at 120.80 and ride the price to a target of 124.00. A stop just below the support level at 120.30 should give enough cover to ride out minor falls.

Action: BUY Japanese Yen to US Dollar • Target 124 • Stop loss 120.30

TIME TARGET: 3 WEEKS