Forex Strategy Video: USDJPY and Yen Crosses Rebound or Collapse?
• USDJPY suffered only its third 1 percent-or-greater drop in four months Monday
• The drop is not merely technical, risk trends may overwhelm the BoJ's effort to drive the yen lower
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It isn't a coincidence that the yen crosses experienced a market-wide tumble at the same time the Nikkei 225 suffered a massive decline. As abruptly as investors can abondon equities as a 'risky' asset, the yen crosses represent carry trades without substantial carry. Fundamentally, these are expensive pairs with little buffer and a primary bullish dynamic that is more passive than proactive. Without a market-wide appetite for any and all yield at the expense of volatility, the Bank of Japan's (BoJ) efforts to drive the yen lower (yen crosses higher) will quickly fail. We take a closer look at the yen and its trade potential in today's Strategy Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.