Forex: Yen bears march to its own drummers
Forex pairs in this Article »
USD/JPY
FXstreet.com (Barcelona) - The Yen continues to trade in a world of its own, courtesy of the ambitious promises to end deflation by printing unlimited money from Mr. Abe, set to become the next Japanese PM this Sunday. Today in Asia, the overstretched bearish tendencies in the battered Yen have worsened to the tune of 25-30 pips on average.
Astonishment to the sharpness of its rise? The radical shift in language by Mr. Abe has this time many analysts speculating that the monthly consistency of money printing by the BoJ could be finally a long term weight for the Yen. Expansion of money creation, sadly, is a common practice these days, with global central bank's balance sheets beefed up over $11 trillion since the GFC.
Disbelief the rise may continue? We had a period from Feb thru March in which an even sharper rally saw USDJPY spot rate travel as high as 84.15 before the pair's revisit to 77.00. With the fresh memory of the latest upside attempt at levels overhead failing, the key to imagine USDJPY legs being durable would be an upside resolution through 84.15 high, the next key upside barrier going forward.
What seems hard to imagine is that the vertical rise can be sustainable past the Sunday's Japanese election, as daily technical are screaming to take a breather before other longs get interested to join the Yen bear's train. Even if the results for Mr. Abe are good enough to bring forward his ultra-easing plans, value to enter a Yen trade is still seen on pullbacks, thus the danger from 'buy the rumour sell the fact' kind of reaction post Sunday elections is still mid-high.
Frustration not to be on board? From an hourly perspective, since there is little value to be chasing the price higher from current levels, those traders who have yet to get on board of the USDJPY bandwagon, some levels standout as interesting value areas to bid the pair, depending on the trader's risk profile. Aggressive ones may try 83.30, the 38.2% fib from breakout point as first support on shallow retreats, followed by 83.00 round number - more conservative - ahead of important 82.80.
If an landslide victory from LDP's Mr. Abe provides the leader with enough power to oblige the Bank of Japan to set a 2% inflation target by law, thus scrapping out the so called independent role a central bank should enjoy, that may well be the cause of some long lasting change in Yen dynamics beyond end of this year, and certain USDJPY calls +84.00 may come true.
On the contrary, remember the market is pricing extremely aggressive easing policies from the BoJ, thus any little setback that may perturb such expectations, at current overdone levels, can quickly prompt some flash corrections lower.
Astonishment to the sharpness of its rise? The radical shift in language by Mr. Abe has this time many analysts speculating that the monthly consistency of money printing by the BoJ could be finally a long term weight for the Yen. Expansion of money creation, sadly, is a common practice these days, with global central bank's balance sheets beefed up over $11 trillion since the GFC.
Disbelief the rise may continue? We had a period from Feb thru March in which an even sharper rally saw USDJPY spot rate travel as high as 84.15 before the pair's revisit to 77.00. With the fresh memory of the latest upside attempt at levels overhead failing, the key to imagine USDJPY legs being durable would be an upside resolution through 84.15 high, the next key upside barrier going forward.
What seems hard to imagine is that the vertical rise can be sustainable past the Sunday's Japanese election, as daily technical are screaming to take a breather before other longs get interested to join the Yen bear's train. Even if the results for Mr. Abe are good enough to bring forward his ultra-easing plans, value to enter a Yen trade is still seen on pullbacks, thus the danger from 'buy the rumour sell the fact' kind of reaction post Sunday elections is still mid-high.
Frustration not to be on board? From an hourly perspective, since there is little value to be chasing the price higher from current levels, those traders who have yet to get on board of the USDJPY bandwagon, some levels standout as interesting value areas to bid the pair, depending on the trader's risk profile. Aggressive ones may try 83.30, the 38.2% fib from breakout point as first support on shallow retreats, followed by 83.00 round number - more conservative - ahead of important 82.80.
If an landslide victory from LDP's Mr. Abe provides the leader with enough power to oblige the Bank of Japan to set a 2% inflation target by law, thus scrapping out the so called independent role a central bank should enjoy, that may well be the cause of some long lasting change in Yen dynamics beyond end of this year, and certain USDJPY calls +84.00 may come true.
On the contrary, remember the market is pricing extremely aggressive easing policies from the BoJ, thus any little setback that may perturb such expectations, at current overdone levels, can quickly prompt some flash corrections lower.
Free Annual Reports
