JPY crosses/USD/JPY

Yen selling begets more Yen selling

The FX market is like a great big herd of sheep, constantly looking for direction and then all piling off blindly in one direction just because one led the way.

After chatting with quite a few people, it seems to me that the market is continually selling Yen because it’s the directional thing to do. Not a lot of thought going into it, but if everyone else is buying EUR/JPY then I should be too! Real-money, hedge funds, CTAs and retail traders, all doing the same thing.

Is EUR/JPY headed to 140? Or even 150? Possibly, I have no idea. But if you want to see what happens when the herd of sheep reaches the edge of a cliff, simply look back at AUD/JPY during the GFC when it was falling by 15% in half a session! That’s what happens when you trade blindly in one direction without an underlying fundamental reason.

  1. Sean,
    I swear I remember you reporting that a certain hedge fund was saying that EUR/JPY would see 130 at the begining of 2013! Goldman Sachs (surely they’re to be trusted) is long EUR/USD till 1.37 and that’s looking like it could be a reality fairly soon and it doesn’t look like anyone’s about to be short Yen in the coming months, so as far as EUR/JPY at 140 is concerned, why the hell not?! It’s showed no signs of exhaustion yet and is trading fairly consistently- it seems like for the last month that you could short it on a Monday and make sure to be long by Wednesday and be doing just fine, it’s ridiculously fantastic and if the day comes where it does fall 15% in half a session… well then that’ll be pretty decent day- I’m sure a great many of us have been watching this pair and feeling nothing but regret…

  2. Absolutely Skylar, I’ll dig that link up. It was 104 at time and I had lunch with them n they said plenty of hedge funds were bullish for 130. Pity I didn’t believe him 🙁

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