A bit of “make it or break it” mentality here this morning as The Nikkei has pushed higher ( with JPY now trading down to it’s “hard-line of support” ) with The U.S Dollar pushing near term highs – where it was turned back in both January and a February re-test.
This puts EUR at “its major line of support” at 1.34 as well GBP “just hanging around” the upper sloping trend line ( daily trend still very much up ) near 169.50
A significant junction to say the least, as correlations across currencies suggest “a move” is certainly pending.
Currency markets should likely make a solid move here in coming days – breaking the summer doldrums.
Transports have clearly broken below support suggesting further decline, and The Dow is now under the “previously suggested top” at 16, 950.
I’ve essentially had this boiled down to a “risk on vs risk off” mentality as of late considering all the larger geopolitical factors, coupled with continued “poor data” coming out of Japan. The Yen has been the largest driving force of this continued rally in risk, as the continued printing, then conversion to USD and purchase of U.S Equities works it’s magic. The Fed passes the buck to The Bank of Japan to do the heavy lifting.
Consider 200 billion per month in paper coming out of Japan, compared to the now “only 35-45 billion” from The Fed to put this in perspective.
Japan is where the money is coming from.
A close eye on the current “range” on currency pair USD/JPY is really all you’ll need.
Break out – or breakdown?
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