USD/JPY continues to be short! Tetsu Emori's "Real Trading Strategy (1/12)"

In the foreign exchange market, there are many voices saying Trump's press conference was extremely disappointing. The dollar was broadly sold, but the Mexican peso alone has been hitting record lows against the dollar. It seems Trump's warning that he would impose high tariffs on cars imported from Mexico for U.S. automakers continues to influence. Meanwhile, the People's Bank of China, in cooperation with related authorities, announced that it conducted on-site inspections of major cryptocurrency "Bitcoin" traders. The aim is to check whether they are handling foreign exchange trading without authorization, among other things. Bitcoin is also used among China's wealthy as a means to move funds overseas, and is seen as part of efforts to curb capital outflows. In China, due to uncertainty about the economy's prospects, there has been an acceleration in investments in overseas assets, and as a result downward pressure on the yuan has intensified. The authorities are continuing market intervention to buy yuan and sell dollars by depleting foreign exchange reserves to stop the rapid depreciation of the yuan, but results have not been achieved. Given that the pace of foreign exchange reserve depletion is accelerating, the authorities may be growing nervous. There are indications that global Bitcoin prices are beginning to slump as a result of these movements.

【Currency Trading Strategy】

USD/JPY: continue with a short position. The favorable condition for selling on rallies remains unchanged. I want to continue with a sell-on-rally stance.
EUR/JPY is on hold. However, the trend is downward.
EUR/USD is on hold. There is a slightly bearish risk.
GBP/JPY is on hold. It is oversold, with potential for a rebound.
GBP/USD: take profits on the short, and I will refrain for today.
AUD/JPY is on hold. It is in an upside trend but somewhat overbought.
AUD/USD remains long. Today I would like to take profits around 0.75.
ZAR/JPY is on hold. The trend is downward, but the sense of being oversold is strengthening.

Basically, I want to base my thinking on a USD/JPY short as the core strategy. The AUD has also yielded substantial profits, but there is no need to push too hard. Going forward, continue to monitor yen-related moves with USD/JPY, stand by on cross-yen pairs, and for dollar-based views, focus mainly on the euro. The basic view is to consider selling USD/JPY on rallies. As mentioned, the deviation of 118 yen from its theoretical value is 15 yen, corresponding to the largest level on record. When such a deviation occurs, in all past cases USD/JPY has undergone a substantial correction to revert. Therefore, there is theoretical backing, and selling on rallies provides a sense of security.

For more, in Tetsu Emori's 'Real Trading Strategy'!