The Future of the Foreign Exchange Market, Episode 124 [Tomotaro Tajima]

Tomotaro Tajima Profile

Financial Analyst. Alfinaunts President & Representative Director. Born in Tokyo in 1964. After graduating from Keio University, he switched career following his time at the current Mitsubishi UFJ Securities. He analyzes and researches a wide range from finance and the overall economy to strategic corporate management, and further to individual asset formation and fund management. He serves as a lecturer at lectures, seminars, and training programs hosted by private companies, financial institutions, newspapers, local governments, and various business associations, with an annual number of lectures around 150. He has written serialized pieces and been quoted in many print media, including Weekly Gendai “The Rules of Net Trading,” and Igzamina “Money Maestro Training Course.” He also writes columns on numerous websites about stocks, foreign exchange, etc., and is highly regarded as a stock and FX strategist. He also contributed to the Home Economics section of the Free People’s Publications “Korean Knowledge of Modern Terms.” After appearing regularly on television (TV Asahi “Yaji-uma Plus,” BS Asahi “Sunday Online”) and radio (Mainichi Broadcasting “Tsubasa’s Asa-ichi Radio”), he now serves as a regular commentator on Nippon TV CNBC “Market Wrap,” and Daiwa Securities Information TV “Economy Marche,” among others. His main DVDs include “Very Easy to Understand: Tomotaro Tajima’s FX Introduction” and “Very Easy to Understand: Tomotaro Tajima’s FX Practical Technical Analysis.” His major books include “Wealth Reassessment Manual” (Paru Publishing), “FX Chart ‘Formula for Profit’” (Alchemy), and “Why Can You Become Asset Rich with FX?” (Texts), among many others. The latest publication is “How to Profit by Riding the Rising US Economy” (Free People’s Publications).

This article is a reprint and revised edition of an article from FX Appreciation.com, August 2020. Please note that the market information described in the body may differ from current market conditions.

US and Japanese stock highs; risk appetite remains, but dollar-yen direction is unclear

The Dow Jones Industrial Average, a representative U.S. stock index, has recovered above the 20,000-dollar mark by the time of writing. The rise from the March low of 18,213 dollars amounts to about 38%, which is astonishing. Similarly, in the near term, the Nikkei Stock Average has retraced to the 21,400 yen level, and the rise from the March low of 16,358 yen exceeds 30%. As a result, a 61.8% retracement of the decline from January’s high to March’s low has been achieved this year.

In the previous update, regarding the possibility of a second bottom after the March stock plunge, I wrote, “Everyone is unanimously warning of the arrival of a ‘second bottom,’ so would things actually unfold as they predict?” And indeed, up to writing, there has been no movement toward a second bottom.

More logically interpreted, due to the expansion of the novel coronavirus, the aspect of the real deterioration that would later be evident was anticipated in advance by the market, and even as truly bad economic indicators and economic data appeared one after another, investors initially perceived it as “bad material exhausted.”

Of course, it is also notable that, as former Federal Reserve Chairman Ben Bernanke stated in late March, the view that “it is wrong to compare the virus outbreak with the Great Depression” and that “the Great Depression was man-made, but the virus is like a natural disaster” was widely shared.