The only reason to buy JPY is to cut existing positions

The BOJ action of today is certainly not a strong signal to suddenly buy the Yen. On the contrary, its yet more reason to look to sell the Yen but finding the correct entry level is extremely important. As we spoke at length about last week, the entire market was ueber-short JPY (long USD/JPY) and after gorging itself to bursting point above 80.00, the only way was down from there.

Eventually the Yen will fall heavily, but from where and when nobody knows. Japanese corporates are scared and the market has become accustomed to levels near 80JPY and so long as this trend remains in place, the Yen bears are in for some pain.

If you’re bullish USD/JPY or AUD/JPY, then patience is a must. I’m convinced that when the tide turns both these pairs will be back above 100 but staying solvent until that happens could be tricky 🙂