Flash: It probably takes a break of JPY99.60 to start talk top of some significance is in place - BBH

According to Marc Chandler of BBH, “the main development in the foreign change market over the past week has been the short squeeze of the yen. The move coincided with a backing up in JGB yields, with the 10-year approaching the 1.0% threshold, a nearly three-fold increase since the BOJ announced its more aggressive monetary stance in early April. The Nikkei took it on the chin, falling 12.5% between Thursday's high near 16k and Friday's low just below 14k.”

“Many of the foreign investors who have poured almost $80 bln into Japanese equities this year have hedged the currency risk, by selling the yen. However, given the slide in Japanese share prices, they may be over-hedged. To reduce the hedge, yen needs to be bought,” Chandler went on to say.

On a final note Chandler commented, “a band of support for the dollar extends from JPY100.60 to JPY100.00. The top of the band corresponds to a 61.8% retracement of the rally that began on May 9 near JPY98.65. The lower end of the band is the top of the month-long consolidation triangle pattern (early April through early May). The RSI, MACDs and Stochastics have turned lower. It probably takes a break of JPY99.60 to start talk in earnest that a top of some significance is in place.”