Call me crazy or anything else, but one thing I know for sure is the market absorption. After the MoF intervened in USDJPY by buying JGBs, it's always the same story: the market will react negatively and then return to the same levels it came from, in this case, 160.000. 

There's a possibility that the MoF will intervene again when it reaches that point, but they can't do so multiple times in the same year as they're spending money to strengthen their currency, and it's simply not working in their favor. 

Inflation will rise, and the currency, on top of everything, will depreciate. So, I'm long on USDJPY until it reaches 160 again, and then we'll see how we proceed from there.

Another thing that nobody is mentioning is the difference between the USDJPY and the US-10 year real yield spread. The difference is massive, and USDJPY has already outperformed. That means more strength is to come.

Yes, Before You Ask - I'm Long USDJPY!

May 01 2024

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