Forex Flash: USD/JPY confined to 92.20-94.00 range - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that for the better part of the past two weeks, the dollar has largely been confined to a JPY 92.20 and 94.00 range.

He sees that it successfully tested the lower end of the range before the weekend and as it became clear that the G20 were not going to single Japan out or chastise it, the dollar recovered. He feels that It should now test the upper end of the trading range and he is a bit wary of a potential reversal there.

He writes, “As hubris often precedes a lesson in humility, so too when the Wall Street Journal writes of how much money some large hedge funds are making in the short-yen trade and the talking heads on business television discuss how everybody knows to short the yen, one must worry that the gig is up--like going to a New Year's Party after midnight.” On the dollar´s downside, he notes that the greenback has not closed below its 20 day MA since the Japanese election was called on November 15th and it is now close to JPY 91.95, just below the lower end of the trading range.