The technicians at Citi FX say they are increasingly worried about a sharp fall in USD/JPY and I get the same sense, despite today’s modest yen weakness post-ISM.
They say a USD/JPY fall to 76.50 is “a real danger” as the slow bleed accelerates. In my opinion, the monthly USD/JPY chart shows the potential for a further downside correction, at the very least.
They also see vulnerability in yen crosses including AUD/JPY, GBP/JPY and EUR/JPY. Further, they note that the Nikkei looks poised for a breakdown.
I have been waiting for a chance to establish long-term yen positions but there is a solid technical argument to wait-and-see or to establish shorts at the moment.
