IMO USD/JPY is at a turning point. Technically it's still in a down trend, but look at Daily & Monthly charts. 80 (just below) is a historical all time low. There is a triple divergence on Monthly chart, which could be a quad one when/if 80 is re-tested. Price action on Daily is showing tighter trading ranges (oscillations). Now for some FA here is an extract from the Japanese Investor blog, which I follow. "Japan's Day Late and Dollar Short Policy: - Saved by a US Treasury Bond Selloff? September 6, 2010 * After a string of weak economic reports, Fed chairman Ben Bernanke sent investors into a tizzy on June 20 by telling Congress the economic outlook was "unusually uncertain," which was backed by the August 10 Fed press release that outlined the Fed's decision to keep its current balance sheet size and reinvest maturing agency debt and agency MBS in longer-term Treasury securities, which immediately had investors speculating about a resumption of QE. As a result, global bond yields tanked, the Yen, Swiss Franc and Asian currencies surged, and stocks sold off. * While the main scenario may very well be deflation, the U.S. is not there yet, and behavioral investing proponent James Montier of GMO estimates the US bond market has already discounted a 70% probability of a double dip/Japan-like malaise, while the most he and most strategists/economists are willing to go is a 50% probability. Further, recession indicators like the Philadelphia Federal Reserve's Anxious Index and ECRI's Weekly Leading Indicators suggest a much lower probability. Thus the stage was set for a reality check in the bond market, and for a short-covering response in stock prices to any surprisingly good news, which is what investors got last week with the August US manufacturing data. We now have what looks like a 1,040~1,130 trading range in the S&P 500, and a braking of the dash to bonds as well as speculative pressure to push JPY to new historical highs. * Our August 2, 2010 "Japan's next 15 minutes of fame" call was too early by some 9% for 10 year US treasuries, 5% for JPY/USD and 6% for the Nikkei 225. But if what we saw last week is indicative of yet another shift in investor sentiment away from double-dip/QE II, the stage is still being set for Japan's next 15 minutes of fame, despite investor disgust at the BOJ and Kan Administration's "day late and a dollar short" response to the soaring JPY and chronic deflationary pressures. All that is needed is more profit-taking in bonds and a significant unwinding of the bubble of speculative long JPY positions as traders realize they can't push JPY/USD past JPY80/USD and adjust positions for a 40%~50% probability of double dip/QE II instead of 70%~100%." Charts to follow.