What a minefield in USD/JPY this week.
The BOJ caught many in the market wrong-footed and doubled down on yield-curve control, leading to a sharp +300 pip rally but that lasted only a few hours before completely reversing as fresh shorts piled in.
Then, even with global yields falling further, USD/JPY refused to continued sliding and now has jumped 200 pips to 130.45. Some are highlighting position squaring and that makes a lot of sense with yields also up 1-6 bps across the Treasury curve. Add in heavy options activity before the BOJ and Kuroda's comments today in Davos and you have to worry if they'll try and ride out YCC.
Technically, today's rebound is above the 61.8% retracement of the Wednesday range so I don't see a spot or reason to fade this price action.
