The USD/JPY reversed earlier gains as it looks to continue the current bullish trend. Last week we pointed out a divergence between the pair and equity markets as an opportunity. We finally saw the expected yen weakness as the pair caught up with rising equity markets soaring over 200 pips. Dollar/yen has seen its correlation with risk jump to 48% from 34% a month ago as the pair continues to see its traditional relationship re-established.  U.S. interest rate expectations have dimmed from a month ago when we saw the Fed raise the discount rate which has also seen its influence on price action diminish. 

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This entry was posted on Friday, March 12th, 2010 at 7:15 pm and is filed under Daily FX. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.