Forex Analysis by Matthew Weller covering: USD/JPY, EUR/JPY, GBP/JPY. Read Matthew Weller's latest article on Investing.com
The massive “yen carry trade” unwind was technically- and sentiment-driven, and could absolutely run further after pausing for a few weeks.
A GBP/JPY break below the bearish flag could expose the early-month lows near 184.00, if not the 1-year lows at 179.00, in time. Instead, they were more technically- and sentiment-driven in nature: As the yen broke certain resistance levels, it convinced more traders that the years-long carry trade may be unwinding, prompting them to unwind their carry trades, leading thewe could absolutely see another leg higher in the yenLooking at EUR/JPY first, the cross nearly fell to its 1-year low near the 154.
Moving forward, bulls will want to see if GBP/JPY can break durably above its 200-day MA at 192.00 or whether the last 3 weeks represent a mere counter-trend correction against the strong bearish momentum. In that scenario, a break below the bearish flag could expose the early-month lows near 184.00, if not the 1-year lows at 179.00, in time.
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