USDJPY Big Picture: Retest 124 Possible, Then 200+
After a sudden policy shift from the BOJ, we saw the market trend reverse course and fall from the 140s all the way back to 131.
It is mind-boggling that top national currencies are this volatile, but here we are.
Now the overreaction to the policy shift has retraced a bit and we are back at 134.
Either a dovish hint by Powell or another hawkish step by Kuroda could have us see a retest of 124.
What is priced in is Powell slowing raises into spring 2023 and then leveling off, and Kuroda continuing to bide his time with no more major shifts.
This is the most likely scenario and would probably have us continue ranging 130-140.
However, any event that requires the FED to shift policy even slightly more dovish will dump this pair to retest 124.
That is something we should be ready for and expect. If that happens, 124 is a very strong entry point.
Notice that the arc still has many years to play out the slow death of the yen.
It is irrational to be optimistic about the yen long term.
Longer term, both technically and fundamentally, USDJPY is heading to 200 this decade and then to infinity and beyond.
It is mind-boggling that top national currencies are this volatile, but here we are.
Now the overreaction to the policy shift has retraced a bit and we are back at 134.
Either a dovish hint by Powell or another hawkish step by Kuroda could have us see a retest of 124.
What is priced in is Powell slowing raises into spring 2023 and then leveling off, and Kuroda continuing to bide his time with no more major shifts.
This is the most likely scenario and would probably have us continue ranging 130-140.
However, any event that requires the FED to shift policy even slightly more dovish will dump this pair to retest 124.
That is something we should be ready for and expect. If that happens, 124 is a very strong entry point.
Notice that the arc still has many years to play out the slow death of the yen.
It is irrational to be optimistic about the yen long term.
Longer term, both technically and fundamentally, USDJPY is heading to 200 this decade and then to infinity and beyond.
Comment:
Resistance at 150 has broken decisively (now at 155.30). This confirms the bullish pennant with the target at 202 mentioned above.
It's probably going to be a slow burn with plenty of interventions and policy shifts along the way.
The days of seeing Japanese tourists visiting the US and Europe are over.
It's probably going to be a slow burn with plenty of interventions and policy shifts along the way.
The days of seeing Japanese tourists visiting the US and Europe are over.
The pennant pattern - and also the inverse head and shoulders in this chart - converge on a target near the end of the blue line at 202.23.
The timing is more difficult to estimate but with this chart it will be sometime in 2025.
Saving your wealth in yen is insanity at this point.