Nikkei has leveled off with a "media explanation of de-risking from Italian Referendum", but looking comparing with the DXY USDJPY has really gapped (US equities also seems to be the same story). Strong case for US strength remains, but bulk of the Japan's strength ( = JPY's weakness ) is USDJPY-driven, unlike the EUR and GBP, which has has recent developments in the last 6 months to warrant their respective weakness. While BoJ's massive QE continues, the yield curve control was a indirect admission of defeat of QE, and there is also an end to how much they can buy in 2017 and 2018. Adding the fundamentals and the the gap with the DXY, there is a chance that USDJPY has priced in a lot less of the Italian referendum that others realize. Not saying this is a another BREXIT, but the move back then was a Strong USD, hella STRONGER JPY.
Again, case for US strength remain (FOR NOW). My only comment is that the risk of holding the USDJPY long over the weekend may not be worth the returns. Bull can always reload early Monday. Bears should also take profit in small portions until we get a better sign of trend reversal and the pullback.
Again, case for US strength remain (FOR NOW). My only comment is that the risk of holding the USDJPY long over the weekend may not be worth the returns. Bull can always reload early Monday. Bears should also take profit in small portions until we get a better sign of trend reversal and the pullback.