Tonight's U.S. CPI strategy ~ How far will the dollar strengthen and the yen weaken? ~ copy
How far will the dollar's strength and yen's weakness continue?
As I have mentioned before, the USDJPY is broadly in a yen-strengthened direction
This is the USDJPY chart; the red line is the 52-week moving average
This red jagged line represents the charted average over the past year
This time, from 161 yen in April to the September period where the dollar briefly dropped to the 139 yen area,
you can see that it broke significantly below the 52-week MA
What that means is similar to this time as well
It is a phase where the USDJPY had been rising for multiple years,
and even within a 3- to 4-year rising trend, there are temporary declines
That means it almost did not break the 52-MA
When it completely broke through, what did that signify?
It indicates a transition from a multi-year uptrend to a downtrend
A movement that broke significantly below the 52-MA is not a temporary drop
but a shift to a multi-year downtrend for the dollar/yen
It suggests a possible trend reversal from a yen depreciation to yen appreciation
If the USDJPY were to shift to a downtrend, of course, there can be temporary rises
in the market
What characteristics would that have, and I want to compare with similar past
temporary rises in a downtrend
This is a period from 2007 to 2011 when the USDJPY was in a downtrend
Within that period there were moments when the dollar rose temporarily
A closer look shows it slightly surpasses the red 52-MA line and then heads down again
That is the characteristic of temporary rises
A little over2%.
Then in this case too, perhaps a temporary rise could exceed by about 2% at most?
Even in a temporary move, it is possible to break the 52-MA two or three times
Right now the 52-MA is written as 150.6 yen
If the USDJPY were to rise until it exceeds the 52-MA by 2%+
That would put it at about 153 to 155 yen
That range could be considered a temporary rise
However, I personally think it won't go that far
Compared with past examples
I think it could retreat to around 150 yen
Additionally, there is some likelihood it could exceed 150 yen to some extent
But probably only up to around 151 or 152 yen
Something like that is my view
All depends on the US rate-cut expectations
If US CPI today comes out strong,
I would target a short-term decline in the latter half of the 151 yen range
Pivot line
R3: 150.239
R4: 150.756
Or perhaps even 151.14 is in view
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