USDJPY Mean Reversion Longs This strategy involves capitalising on price divergences that revert to their mean over time. Currently, key indices and interest rates indicate a strong setup for this strategy:
JXY (Japanese Yen Index): The JXY is down almost 3.4% from its previous lower high.
DXY (US Dollar Index): The DXY is up over 4% from its previous higher high.
Interest Rates:
US Interest Rate: 5.5%
Japan Interest Rate: 0.1%
Given the significant strength of the US Dollar compared to the Japanese Yen, it is advisable to focus on long positions . The disparity in interest rates further supports the strength of the USD against the JPY, providing a favourable environment for long trades.
Current Positioning:
I currently hold long positions in this currency pair.
I plan to add to my positions as the price breaks above the 157.1 level, signaling further upward momentum.
This strategy leverages the expectation that the Japanese Yen will revert to its mean relative to the US Dollar, supported by strong fundamental indicators such as interest rate differentials and index performance.