The forex tape is voting and Japan is winning
|Japan is winning
What we are seeing is not a simple dollar wobble. It is a capital rotation. The tape is whispering Sell America at the margin and shouting Buy Japan with conviction. And the yen, not the euro, is the chosen vehicle.
The trigger was political clarity. Since Prime Minister Sanae Takaichi delivered a landslide victory for the Liberal Democratic Party, the market has recalibrated. Fear of fiscal slippage has been replaced by a growth premium. Policy stability is oxygen for foreign allocators. When politics removes uncertainty, capital removes hesitation.
The numbers confirm the story. The yen is up nearly 3 percent over the past sessions and is trading as high as 152.30 in Tokyo. That move caught many long USDJPY books on the wrong side. You could feel the discomfort. And in this game, discomfort is fuel.
But here is the nuance. The stronger US jobs print did not ignite a sustained dollar rally. It produced a flicker, not a flame. A resilient US economy is no longer automatically dollar bullish. Instead, traders are extrapolating global resilience. If the U.S. is tentative, Japan is not the reflation trade. That mental shift matters more than one payroll print.
Foreigners are not nibbling. They are buying both Tokyo equities and JGBs. That is the tell. When equity inflows and bond inflows align, you are not looking at hot money chasing momentum. You are looking at asset allocation. That is sticky capital. And sticky capital moves currencies.
Technically, the battlefield is clear. A breakthrough at 152 will likely open a mini trap door. The 200-day moving average around 150.5 is the real line in the sand, and we could see a wholesale changing of the guard on a break. Make that clear with conviction, and the yen story shifts from a tactical trade to a structural narrative. On the crosses, it is already flexing muscle, up sharply against the euro and through key moving averages. That is not noise. That is regime shift potential.
Elsewhere the Dollar is leaking altitude. The yuan is grinding stronger through 6.90 on the back of export strength and a subtle green light from Beijing to tolerate appreciation. The Australian dollar is sniffing out a more hawkish RBA stance. Hence, the dollar index is sliding toward a weekly loss.
This is how themes are born. Not with fireworks, but with synchronized drift.
The calendar risk is obvious. Jobless claims and inflation sit ahead. The market will parse every decimal point. But here is the bigger picture. When flows start to diversify away from a dollar overweight and into markets with policy clarity and industrial leverage for the AI build-out, the dollar stops being the only game in town.
Right now, the yen is no longer just the funding currency. It is becoming a destination.
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