Betting Against The Yen: A Once In A Lifetime Opportunity

Going against a trend that has been established for multiple years is not for the faint of heart. The strength of the Yen is formidable as it is a big headache for the moribund Japanese economy.

Then there is the fact that betting against central bank interventions in the forex market is about as a sure thing as you’ll find. With the G7’s coordinated intervention in March to lower the Yen, it would be a foolhardy position to join them.

Or would it?

The research note below argues succinctly that the Yen will reverse its long term trend. This would not only be a rare and shocking development for obvious reasons, it would have far reaching ramifications.

I checked the usual suspect of sentiment indicators for the Yen and they are not very helpful right now. The aggregate picture is lukewarm, failing to provide us with a clear extreme that contrarians prefer to see. In either case, the research argues that if or when this reversal develops it will not be sudden but gradual. So we may yet see sentiment align with the fundamental reasons provided below and give us a more accurate entry for the trade.

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