(This is an excerpt from an article I originally published on Seeking Alpha on February 16, 2012. Click here to read the entire piece.)
The U.S. dollar and Japanese yen have played an up and down game of seesaw since July of last year. The USD/JPY, or the inverse of the Rydex Currency Shares Japanese Trust (FXY), has gone nowhere over this time. However, I still believe a more lasting change is brewing where yen weakness will be the bias over dollar weakness.
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Source: FreeStockCharts.com
Once USD/JPY manages to break out above the highs from the last currency intervention, the U.S. dollar should finally be off to the races against the yen.
{snip} While the currency markets ever so slowly price in this future potential, on-going efforts at competitive devaluation on both sides of the Pacific are likely to continue to make the path higher for USD/JPY a circuitous one.
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on February 16, 2012. Click here to read the entire piece.)
Full disclosure: long USD/JPY