Currency In Distress

YEN WILL IT END? - What a move in the Yen over these past few sessions! Once the market broke 110.10, the door was open for a move to 115.00. But to think it would happen in a couple of days was just crazy. And yet, on Monday, the market easily cleared 114.00 and is now a stone's throw away from 115.00. As much as the fundamentals are Yen bearish, I don't believe this market will continue at this pace and should instead defer to a period of corrective activity and consolidation. While Kuroda and company are well aware of the Yen weakness they've invited, I don't think anyone wants to see their currency fall out of bed like this. One of the things that has a way of offsetting Yen depreciation is equity market declines, and the fact that equities have been melting up, has further contributed to the violent Yen collapse. So maybe it's some equity selling in the sessions ahead, or maybe it's warnings of excessive currency movements, but at some point soon, look out for a corrective rally in the Yen (i.e. USDJPY lower).

MORE TEASE - Overall, it has been a bit of a weird time. The US Dollar remains bid, which has been in line with my outlook, and yet, there haven't been any really good opportunities for meaningful positions. Generally, I like to look to buy a market on a dip, and we just haven't seen the US Dollar pull back over the past several weeks. Instead, it has been some consolidation ahead of what appears to be a bullish resumption. This doesn't give me any good entries to build into a meaningful long US Dollar position, and instead, I am sidelined for the most part, playing some shorter-term set-ups. EURCHF is still sitting there and it continues to tease us every day. But so long as it flirts with 1.2045, there is a chance the level will be taken out to open that critical move below, exposing the all-important 1.2000 SNB defense. So we could be getting long this market soon enough. Finally, gold and silver are correcting after breaking to fresh yearly lows, and with daily studies oversold, we could see these markets recover further on Tuesday.

How much longer will $EURCHF tease? Via @joelkruger

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