USD/JPY: Current Risk Profile Keeps Pair In Whipsaw State

Even as sellers made progress by taking the exchange rate significantly away from its trend high, the rampant state of affairs in the US equity market is undoubtedly creating an excess of JPY supply in the market, which is resulting on the downside being well capped despite broad-based USD weakness from a microflows standpoint. It would have been a much uglier picture amid falling US30Y and DXY in the last 2 days if US equities had shown some fragility. The microflows state is characterized by USD weakness within a risk appetite context, which tends to results in fairly range bound conditions. If we take as reference the slope of the DXY & US30Y by the NY close, and in light of the absence of significant upside momentum despite the soaring state of the S&P 500, it makes me think that as long as the slope of the DXY/US 30Y 25-HMA (microflows) keep pointing lower, the red area should serve as a wide yet fairly good indicative area to look for sell-side opportunities. Similarly, if analogous conditions extend as the pair tests 110.25–30, be alerted for buy-side campaigns to be initiated. This latter scenario is further anchored by the notion that the macrostructure in intermarket flows (IMFs) continues to be supportive of buying the dips at discounted prices if price agrees.