The case for a Yen rally (USDJPY bear) is strengthening despite large cap USD stock indices advances, or perhaps because of them as the gas behind these stocks rallies seems rather watered down: low and declining volumes; Vix at very low (some argue complacency) levels; COT data is weak and the net positions declined (more towards the bearish side) last week; non US large caps divergent from the large caps; HK, China 50, FTSE100, Nikkei and Russell 2000 all put in bearish weekly candles last week with DAX showing a doji. Gold and Silver rallying and the Yen rallying. All in all I remain on the lookout for a bearish trigger on stocks, which we have not yet got, except perhaps on the FTSE100. But on the Yen the breakout is on and currently the channel is being retested. If the USD continues its current bearish direction and we get any stumbling in stocks then this pair will hammer down. My lead scenario is for this pair to make it past parity and probably a good deal lower than that.
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