Last Friday USD/JPY closed above its weekly cloud for the first time since Jul 2007 suggesting that the long-term downtrend is over. If this is the case then we would expect to see further confirmation this Wednesday with the dollar closing the month above its 21-month average (80.90). On the crosses GBP/JPY closing above its weekly cloud at 131.45 would be the final shoe to drop signalling material yen weakness in the months ahead. Such signs would point to 12-18 months of weakness and USD/JPY to 87.
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Barclays Capital