It was a painful week for both USD and USD/JPY bulls as both markets retreated massively following four-week spurts of strength. In both, a Monday breakout in the prior week was soundly rebuffed, but it still seems as though USD/JPY is driving USD markets and the prospect of greater carry unwind can keep that as a force to be reckoned with.
There could be repercussions if we see greater carry unwind, like what showed up in Q3 of last year when USD/JPY fell by as much as 13% while global equity markets sold-off aggressively.
Of note from the weekly chart is the comparison between up and down weeks: When both USD and USD/JPY topped in January, the down weeks showed large moves and the up weeks far more tepid. This week has been another aggressive sell-off, which opens the door for that theme to continue.
And on that front, the 140.00 level still presents as a massive spot of importance - and not just for USD/JPY but also USD and equity markets, as a break of that level indicates larger unwind of the carry trade which could serve as a de-leveraging event, globally. Notably, the long-term trendline of prior support has remained as resistance.
With that said - be careful of chasing breakouts in USD/JPY, as there have been several traps on both sides of the pair this year, including that last trip down to 140.00 which reversed dramatically in the four weeks that followed, by more than 800 pips, trough to peak. - js
There could be repercussions if we see greater carry unwind, like what showed up in Q3 of last year when USD/JPY fell by as much as 13% while global equity markets sold-off aggressively.
Of note from the weekly chart is the comparison between up and down weeks: When both USD and USD/JPY topped in January, the down weeks showed large moves and the up weeks far more tepid. This week has been another aggressive sell-off, which opens the door for that theme to continue.
And on that front, the 140.00 level still presents as a massive spot of importance - and not just for USD/JPY but also USD and equity markets, as a break of that level indicates larger unwind of the carry trade which could serve as a de-leveraging event, globally. Notably, the long-term trendline of prior support has remained as resistance.
With that said - be careful of chasing breakouts in USD/JPY, as there have been several traps on both sides of the pair this year, including that last trip down to 140.00 which reversed dramatically in the four weeks that followed, by more than 800 pips, trough to peak. - js
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.