A scenario where the “single-handed loss” becomes increasingly dominant and pronounced — The future direction of the foreign exchange market 138th edition (updated 2021.06.25)
In Japan's only FX specialty magazine “FX攻略.com,” which had a popular series exceeding 130 installments, “The Future Path of the Foreign Exchange Market,” we will continue to gather insights from financial analyst Tomotaro Tajima to understand how the constantly moving market is expected to behave in the future.
Profile of Tomotaro Tajima
Tomotaro Tajima. Economic analyst. President and CEO of Alfinauntsu. Born in Tokyo in 1964. After graduating from Keio University, he transitioned from Mitsubishi UFJ Securities (current) and began analyzing and researching a wide range—from finance and economics to strategic corporate management, and even individual asset formation and fund management. He serves as a lecturer for lectures, seminars, and trainings organized by private companies, financial institutions, newspapers, local governments, and various business associations, with about 150 lectures annually. He has authored numerous serialized pieces and comments in print media, such as Weekly Gendai’s “Net Trade Rules,” Examina’s “Money Maestro Training Course.” He has also contributed stock and forex columns on numerous websites and earned high regard as an equity and FX strategist. He is also a contributor to the Home Economy section of Shakai Shijō Publishing’s “Gendai Yōgo no Kihōchishiki.” After regular appearances on TV programs (TV Asahi’s “Yaji-uma Plus,” BS Asahi’s “Sunday Online”) and radio (MBS’s “Geki-chan’s Asa-ichi Radio”), he currently serves as a regular commentator on Nippon Telegraph and Telephone’s CNBC “Market Wrap” and Daiwa Securities Information TV’s “Economy Marche.” His notable DVDs include “Clearly Easy to Understand: Tomotaro Tajima’s FX Introduction” and “Clearly Easy to Understand: Tomotaro Tajima’s FX Practical Technical Analysis.” His main books include “Wealth Review Manual” (Paru Publishing), “FX Chart ‘Profit’ Equation” (Alchemix), and “Why Can FX Make You Asset-Rich?” (Text), among many others. His latest publication is “How to Profit by Riding the Rising U.S. Economy” (Jiyu Kokuminsha).
The Increasingly Distinct Picture of the Yen’s Relative Weakness
Currently in the United States, airline labor shortages have become extremely severe, leading to reduced schedules as there are not enough crew members, and air travel is recovering rapidly. States are beginning to declare the reopening of economic activity, and in light of this situation, it is even possible to say that it is somewhat abnormal that the Fed is still continuing asset purchases totaling $120 billion per month.
Of course, the market has already priced in the start of tapering, and attention is increasingly turning toward the possibility of a rate hike beyond tapering. Even so, that would be as early as the end of 2022, and still quite distant.
In any case, the yields on 10-year U.S. Treasuries have remained somewhat contained, while the yields on 2-year and 5-year Treasuries have shown notable strength. In fact, this week, on the 22nd a 2-year auction and on the 23rd a 5-year auction were held, both ending poorly. And recently, as yields on 2-year and 5-year Treasuries have risen, the dollar has been bought in response.
What about USD/JPY and EUR/USD in the near term?
Thanks to this, the euro/dollar has—
