it is interesting, there is a lot of bearish USD/JPY sentiment, but realistically it has been putting in lower lows since the 'bottom' at 115.20ish. as the nikkei continues to get killed its continued sensitivity to a rate hike has become apparent- and it is possible that the carry trade will be valid for a while to come - can you imagine what would happen to the nikkei if BOJ raised rates again here? we would need to see some sustained strength in the nikkei to really make the carry trade unwind imho any thoughts?
With shorts on JPY and quite bear sentiment on JPY (last months) on highs we haven't seen major selloff on JPY (nothing above 122) so this could be eyed as: USD is pretty weak or JPY is strengh as it was. The point after all is that any change (and its starting to) on the enviroment could shift the momentum and the JPY will take the ball again (like is happening right now) As we are trading in ranges i think we are now in a 115-118 range before a 112/3 to 116 range in the future. I don't see a major selloff of USD (unless the world wake up suddenly that the USD currency has major fundamentals reasons to be sold huge) against the JPY because after all the spread on rates are huge even with the BOJ kicking up a couple of basis points. Anyway this is markets and none have a fucking clue about what is going to happens, the key is trade the setups and follow the plan.