A Warning Signal For JPY Longs
Yellen to send USD/JPY back down? Pair completely retraces FOMC drop but Yellen is up next
It's taken two weeks for USD/JPY to undo two days of damage from the FOMC decision. Earlier today the pair touched 113.80 to match the Fed-day high but it's sagged back to unchanged and Yellen will soon get another crack at it.
A quick fall followed by a slow retracement is a classic technical pattern. In general, the quick moves comes on much higher volume and with more conviction and tends to win out.
The rule of thumb heading into Japanese year end is for domestic firms to repatriate and that could hurt USD/JPY as well.
The big driver at the moment is Yellen. In my preview of her speech at 16:20 GMT, I argued for selling the dollar.
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Last week’s MoF data continued to signal strong appetite for foreign securities, with Japanese investors purchasing some JPY 2.3 trn in foreign dent on the week ended March 18, notes BNP Paribas.
"Faltering risk environment and strengthening JPY do not appear to have dented Japanese appetite for foreign securities, which could bea warning signal for the speculative JPY longs which are running at the highest level since 2011 according to our positioning indicator.
The data highlight of the week in Japan will be the Tankan survey on Friday, which our economists expect to show confidence to have retreated moderately," BNPP argues.
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