Asset Watch
Thursday, March 21, 2024
The 20-month moving average has been a reliable predictor of trend shifts. After rising sharply from late 1999 until early 2002, the USD/JPY broke below its 20-month MA and continued its downtrend for another ~three years. Likewise, the 2007 breakdown resulted in a roughly five-year downtrend.
As a result, with the USD/JPY bouncing near the 20-month MA in late 2022 and 2023, traders are still skittish about owning the JPY. However, as 150 has historically been highly overvalued, the next breakdown below the 20-month MA (near 142) could push the USD/JPY back to the 101 to 127 range.
Does the yen offer tremendous value, or will the USD continue its dominance for the rest of 2024?