It’s no secret that int he past several weeks the BOJ has made huge efforts turbo charge their markets and economy through direct YEN smashing. According to a Morgan Stanley report,there is little to show to suggest that Japanese investors have started to allocate assets overseas. So far, it looks like the Japanese investors have kept to the status quo behavior of their tradition patterns during the part of 2013.
As the Japanese yields move lower on the longer end of the stick and the BoJ its huge asset purchases could have an impact on the Japanese investor to seek higher return elsewhere. Also, what if the inflation expectations up-tick? This will add to the catalyst to seek higher returns overseas and we can see this data supporting the outflow after the second week of May. The effect is the JPY continues its weakening trends.
Below we see two simple charts to work the log side of the USDJPY to possibly take advantage of the next leg down in the Yen from now to mid-May as data may support the out-flow of assets.
USDJPY Daily: A range expansion move as a measured breakout above the 100 level can easily spur buying from 100-120 PIPS to target 101.20 levels Doubtful this acts as heavy resistance in the short-term as the pair has butted its head at the 100 level several times and the rejects have been shallow by ~ 150-200 pips. RSI is flat and building a base as the Stochastic is supporting the range the past two weeks.
USDJPY Week: To the left of the week chart I circled the key resistance levels that fit the measured momentum move on the break. Furthermore, as the data might suggest come mid-May, we can see 103.50-105 as the key levels to target. RSI on a week looks terrific and supports the range as does the weekly Stochastic data points.