Yen

USD/JPY has risen by approximately 8% since late October, primarily favoring the US dollar and pushing the yen into a constant bearish zone.

Commodity FX pairs have failed to make much ground from the weaker yen, and with the RBA opening the door to cuts than I suspect the currency bounce on AUD/JPY could provide futile. And that there could be another large drop on the horizon..

A less-dovish BOJ may have strengthened the yen while weak tech earnings weighed on Wall Street Thursday, but these patters could persist on Friday if they follow their usual pre-election path looking, according to historical data.

Stronger EU data and pushback on cuts from ECB sent EUR/USD up to its 200-day MA ahead of risk events. I also assess the trend structures of yen pairs to sort the good from the bad.

Yen-weakness has remained through Japanese general elections and both EUR/JPY and GBP/JPY have put in clean breakout moves from ascending triangle formations.

For FX traders the USD/JPY backdrop has been full of intrigue for the past couple years, and that story isn’t yet over as the pair nears the spot that’s been the scene of some major drama in the pair after the build of the carry.

The yen suck in safe-haven flows on reports that the US government is considering limiting exports of AI chips. And given we have risk events and a US election looming, investors are likely questioning how exposed to risk they really want to be.

The massive “yen carry trade” unwind was technically- and sentiment-driven, and could absolutely run further after pausing for a few weeks. EUR/JPY and GBP/JPY are in play.

Learn about the 10 most traded currencies like the dollar, euro and yen and learn why forex traders prefer trading these major currencies

With EUR/JPY and GBP/JPY testing critical support, price action over the next 30 hours will go a long way toward determining if the year-to-date trends extend or end from here...