In the new year, will yen selling accelerate with rising stocks?! Urgent coverage on pound-yen! A full-blown decline, a corrective drop?

The domestic market in March remained in a stalemate due to end-of-quarter factors, unable to move much.

USD/JPY found support at 110 and briefly rose back into the 112s this week.

Amid these price movements, rumors of penalties on currency manipulation from President Trump caused the USD/JPY to plunge at times, but it then recovered, and going forward

as long as Japan is not targeted, the USD/JPY is expected to test higher levels in the new fiscal year.

I think this is the scenario going forward.





Regarding the USD/JPY, this article covers it

In the previous "Market Compass"
“USD/JPY: Is the rally back on?! And have we secured the condition for cross-yen to test a comeback?”

In the one before that
“Medium- to long-term strategy: Don’t panic! USD/JPY, GBP/JPY, wait for the pullback!”



“GBP/JPY: Is this a real drop now? A corrective decline?”

GBP/JPY, after Brexit, regained some stability and was heavily bought back from year-end to the start of the year.

For GBP/JPY, in the medium- to long-term, one would have liked to start selling on rallies and expect a decline.

On the daily chart, selling signals persisted near the 137 level, but downward pressure has weakened

this week's close saw a bounce to just under 140, and against the yen the price moved into the weekly cloud, suggesting near-term buying may dominate. Of course, in the longer term, a second bottom decline is possible,

but if 140 is held, selling pressure may trigger demand from shorts, and from the peak at year-end the recent declines have been very shallow, indicating a corrective move as we head into early April’s domestic new-year market.

If 140 is kept, there could be a wave of short-covering ahead of the new year, and the declines over the past several months from the year-end rebound may be shallower, raising the possibility of a substantial buying push in early April’s domestic market.

With the new year in early April, there is potential for a significant buying surge as the market adjusts.







◆ If buying back accelerates in early April, it could become an uncontrollable market!

◆ After the Trump rally pushed USD/JPY back to the 148s, have the near-term downsides become unsustainable?

◆ This slow decline resembles a typical corrective phase seen during adjustments,

as the market that surged at year-end turns into a correctionary phase; will it move up again for now?







The weekly chart still shows the market just entering the cloud, but it no longer seems prudent to simply sell with eyes closed.

The April market could see USD/JPY, which has a high degree of correlation, lead the pound and other pairs.



I publish updates on this blog daily.
FX Strategy Blog by Kawaresuigoi, the head of Kawaresuigoi Trading School



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