Video: At What Conviction Level Does the USDJPY Look Like a Trade?

Talking Points:

• Yesterday, we covered the fundamental aspects that are motivating the Japanese Yen

• A drop in global stocks this week has spilled over into USDJPY and other Yen crosses

• Each trader needs to decide 'at what level does this look like a true reversal'

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A slump in global equities has further shaken the foundations of 'risk appetite'. One of the clearest responses in the FX market is coming through the Yen crosses. Yet, at what point would we call it a true and lasting decline? We are fighting a big current in a three-year bull trend, a seemingly insatiable lust for any and all yield, and a persistent QE presence by the Bank of Japan. That said, turns do happen. An aggressive trader may have already called the turn with a USDJPY break below 121.50 support this past session. Conservative participants may require clearing further levels of sentiment or evidence of a systemic deleverage on 'risk'. There is no 'right' answer, simply an evaluation of how aggressive we see ourselves as traders. We discuss trading temperament against a tempting USDJPY drop in today's Strategy Video.

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