USDJPY refuses to go anywhere – that won’t be the case forever, but when do we get a break out of the incredibly constricted technical picture? The JPY upside in many JPY crosses has recently been re-energised by a rally in bonds and a round of risk off behaviour in major equity markets, but at the same time, Japanese officialdom has been rattling the cage on the issue of “excess” JPY strength and we have a G7 meeting today and tomorrow that could be seeing behind the scenes permission-seeking to go the next step in trying new intervention tactics after BoJ easing and 2011 direct intervention failed to do much.
Look for things to get hairy in terms of direct market intervention if the very slowly rising trendline is violated (possible if risk appetite remains on the wane and bond markets follow up with a further rally. To the upside, note the local descending trendline and 200-day moving average. Much higher we have the major longer term head and shoulders as a structural indicator that a real bull market may be finally getting underway. Until then, treachery and choppiness may remain the name of the game – particularly next week if the BoJ/MoF are gearing up for action.
Chart: USDJPY
John J Hardy,
SAXO BANK