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USDJPY – ‘Sleepy Joe’ Dollar Yen waking up!! Double bottom today?

Its been a very frustrating time to all the Yen pair lovers out there, ourselves included. It has come to the point where we have deleted them, temporarily from our watchlists. Yes, it’s that bad! We have seen wild gyrations in capital markets but the USDJPY hasn’t batted an eyelid and even de-coupled from the trend direction of the Nikkei 225 (historically there is a strong correlation between USDJPY and the Japanese equity markets). The reason? USDJPY has been anchored and subdued by the trend direction of US Bond Yields, another asset class that the USDJPY shares a very strong correlation with, as Chart 1 below depicts. The US 10Y Yields have been steadily rising since August last year and are now sitting above 1% and change. which could encourage Japanese flows back to US treasuries and spur upside in the USDJPY cross rate. Therefore, as of today, we have restored all Yen cross rates on our watchlists!

1. USDJPY has been ‘anchored’ by low US Bond Yields

2. USDJPY – Volatility measures at historically low levels, an impending move is on the cards!

3. USDJPY – 4hr Chart: Double bottom in place? Upmove looks impulsive, watch for pullbacks!