Forex Flash: Failure of USD/JPY to break 100.00 has provided a bout of long liquidation - BBH

FXstreet.com (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that he has long argued that the dollar´s advance from the 76 region seen in mid-November was the market pricing in the stimulative monetary and fiscal policy associated the Abenomics.

He feels that the failure of the dollar to rise above JPY100 has prompted a bout of long liquidation. Further, he notes that the greenback appears to be carving out a potential double top. However, he writes, “The neckline is not seen until the JPY95.80 low seen on April 16. If confirmed, the measuring objective is near the late Feb lows around JPY91. The 38.2% of the dollar's rally since it became clear that Abe would be Japan's prime minister, comes near JPY92.”

He adds that Japanese markets are closed on Monday and Friday in the week ahead and Japanese exporter and institutional investors have been thought to be the featured yen buyers. While it may be tempting to try to take the dollar higher without Japanese resistance, he suspects that non-Japanese participants may be reluctant to do so given the large short yen positions already held by the short-term momentum and trend following market segment.