[USD/JPY] Decades of relationship: A history

4 oct.

One of the thing that I love about trading is how we can look at the price history. Since this week the DXY seems gaining momentum (at least in short term), I just think it would be interesting to see the history of relationship between USDJPY as this pair currently possibly pivoting its trend.

This is USDJPY weekly chart, goes back to 2001.

Since 2001, there are 2 major eras: the era where JPY is strong & the era where USD is strong. Both eras share similar timespan, a decade (10 years or so). If the history rhyme, we might now seeing the change of an era, possibly towards the JPY era. For next 10 years ? I don't really know as today's market is much more complex than even 3 years ago.

Nevertheless, current trend is indeed changing. If we look at the current chart, we can see the MACD divergence happened just before the drop in USD value. It's interesting to see how this setup have happened many times in the past 20 years: 2 peaks, MACD divergence, then USD drop. The drop are varied off course, so interesting to see how this time it will played out.

There is a sensible explanation for this though & it's quite simple: FED is cutting rates, while BOJ ends its negative rate regime, hence narrowing yield between JPY & USD, make keeping the JPY in Japan more attractive, or at least less risky.

Cherio...