Yen Shorts Under Pressure

The irrational upmove in the USDJPY has been scaled back by a huge chunk.  It has bitten a big chunk out of latecomers buying into the yen weakness rhetoric.  Japan is in a structural deflation for a good reason.  They are old, and old countries experience a natural deflation as demand for goods drops.  All the money that Kuroda is printing is just going to be sitting at the banks, propping up JGBs.  The Nikkei is full of globally economic sensitive companies that depend on a strong China, and good global growth, not just a weak yen.  Japan has to deal with a weakening China and weakening global growth, along with a domestic economy that is in structural zero growth territory. 

That being said, the yen unwinding seems mostly finished, as the USDJPY selling over the past several days seems capitulatory.  And the ES has support around 1590-1600 area.  You have to be a buyer of dips now, as I still have the view of this being just a pullback in a long term uptrend.