Remember when anything priced in yen was trending higher?
It wasn’t too long ago that if you were looking for an uptrend, all you had to do was throw the yen in the denominator, and voila.
Just last month, the dollar hit a new 34-year high against the yen—levels not seen since the 1980s.
But the tables are turning in favor of the Japanese currency.
While most central banks are either cutting interest rates or considering future rate cuts, the Bank of Japan (BOJ) is hiking—a policy shift that puts a bid beneath the yen…
The aussie-yen is sliding below the former 2013 highs, down more than ten percent since mid-July:
The euro is failing to hold above its former 2008 peak versus the yen:
The pound sterling is slipping back into a decade-plus range following fresh sixteen-year highs:
And, of course, the US dollar-yen pair is retreating beneath its 1990 peak…
The 152 zone marks are the breakdown level for USD/JPY:
The dollar-yen’s path of least resistance now points lower toward 143. Any pullback should find resistance at the May pivot lows that coincide with 2022 and 2023 highs (comparable to the risk level outlined for the futures contract).
Perhaps buying yen isn’t the most popular trade. I get it.
Who wants to step in front of this downtrend, especially after short Japanese yen was one of the best trades of 2022?
But the market environment is beginning to shift. Momentum is leading a bullish reversal in the Japanese currency. And recent dumpster fires, such as US T-bonds and regional banks, are proving winners.
Whether these newfound successes develop into sustained uptrends remains to be seen.
