steve.jarvis's picture

A mixed bag for the Yen. More of the same to come?

During the final 2 months of 2014, the Japanese Yen was right down at the bottom of my Major Currency rankings. Since the start of January, it has improved its standing and over recent weeks has been around the bottom end of the bullish group of Currencies / the top of the neutral group.   The question is, can the recent improvement be sustained, or is this just a temporary reprieve ahead of a return to underlying Yen weakness?

I find that to get the best perspective on any individual Currency's trend, it should be viewed against a range of other Currencies, with the Currency in question on the left side of the quote.  Doing so helps remove any existing bias on an individual Currency pairing and can help make it easier to see the overall picture.  Certainly, in the case of the Yen, this actually means viewing all the charts as an inverse to how they are usually viewed by the market at large, which is no bad thing when trying to spot something different to "the crowd".

At this time, the medium-term trend for the Yen is bullish against the SEK, NOK, EUR, AUD & CAD, bearish against the USD & GBP and more-or-less neutral against the NZD.   Looking at the Yen against each and every one of the aforementioned other Currencies, the Yen appears at risk of initially losing ground across the board, which may last several weeks.  Thereafter it's underlying trend is presently expected to resume, along the lines identified above.  IE: outperformance against the SEK, NOK, EUR, AUD & CAD, underperformance against the USD & GBP, but to remain broadly neutral versus the NZD.

Below are a couple examples of bullish & bearish Yen charts (up = outperform / down = underperform) to illustrate the above.

Top left - JPY/SEK (click on chart for larger image)                           Top right - JPY/NOK (click on chart for larger image)








Bottom left - JPY/USD (click on chart for larger image)                             Bottom right - JPY/GBP (click on chart for larger image)  









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