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28 Apr 2013
Forex Flash: USD/JPY carving out a potential double top - BBH
FXstreet.com (Barcelona) - As the stimulative monetary and fiscal policy linked to Abenomics gets fully priced in, in view of Marc Chandler, Global Head of Currency Strategy at BBH, "the failure of the dollar to rise above JPY100 has prompted a bout of long liquidation, with the greenback appearing to be carving out a potential double top."
Marc adds: "The neckline is not seen until the JPY95.80 low seen on April 16. If confirmed, the objective is near the late Feb lows around JPY91. The 38.2% of the dollar's rally since it became clear that Abe would be Japan's prime minister, comes near JPY92."
As a reminder, Japanese markets will be closed on Monday and Friday this week, which may be seen as an opportunity by some dollar bulls to take the spot rate higher again, since there will be a lesser opposition by Japanese exporter and institutional investors, thought to be main Yen buyers at recent hefty levels.
However, Marc thinks that "while it may be tempting to try to take the dollar higher without Japanese resistance, we suspect that non-Japanese participants may be reluctant to do so given the large short yen positions already held by the short-term momentum and trend following market segment."
Marc adds: "The neckline is not seen until the JPY95.80 low seen on April 16. If confirmed, the objective is near the late Feb lows around JPY91. The 38.2% of the dollar's rally since it became clear that Abe would be Japan's prime minister, comes near JPY92."
As a reminder, Japanese markets will be closed on Monday and Friday this week, which may be seen as an opportunity by some dollar bulls to take the spot rate higher again, since there will be a lesser opposition by Japanese exporter and institutional investors, thought to be main Yen buyers at recent hefty levels.
However, Marc thinks that "while it may be tempting to try to take the dollar higher without Japanese resistance, we suspect that non-Japanese participants may be reluctant to do so given the large short yen positions already held by the short-term momentum and trend following market segment."