The most important event for me in recent weeks was an observation that Jamie made yesterday morning. The S&P had fallen 4.5% yet EUR/JPY was only marginally lower. In recent months, such a move on the equity markets would have seen a 5%+ move lower in the JPY crosses. The fact that this didn’t happen suggested to me that, for now at least, the JPY crosses have fallen far enough.
Add in to this equation the fact that Japanese retail accounts are now said to be short the said crosses, when they traditionally are long the “carry trade” pairs, and the argument for a serious move higher in EUR/JPY and the like starts to look very strong.
EUR/JPY is now in a 115-120 broad consolidation pattern with extreme noise in the middle. I’m looking to play this range with a bullish bias and perhaps take out the big stick on a break above 120 as I expect many shorts to bail out above there.
Let’s hope my hearing aid doesn’t need changing!
Good luck today.
