Fans of the Japanese yen throws it in the heat then in the cold. After an impressive start due to a flash accident, the currency of the Land of the Rising Sun fell into disfavor amid improved global risk appetite. The readiness of the Fed to make a long pause in the process of normalizing monetary policy and progress in the negotiations between the US and China have pushed the US stock indexes to their maximum levels since mid-autumn. At the same time, interest in the carry trade operations and sales of funding currencies have returned. Obviously, in such conditions, the yen had a hard time, but spring came and the situation on Forex begins to change.

Dow Jones and USD / JPY Dynamics

Investors understand that in the face of deteriorating macroeconomic statistics across the States amid a slowdown in the US economy and a strong US dollar, shares cannot grow for an infinitely long time. As we move to the upward, stock indexes drop in speed and corrections become deeper and deeper. The high cost of currency risk hedging when investing in US assets makes Japanese companies think three times before investing money abroad. Finally, the divergence in monetary policy can finally play on the side of the "bears" in the USD/JPY pair.

Inside the financial sector of the rising sun, there is more and more talk about the need for normalization. Despite the large-scale monetary incentive target of 2%, it is still elusive, however, the side effects of the programs can criticize Haruhiko Kuroda and his team. First of all, this concerns losses on banking transactions. In addition, borrowers are in no hurry to take loans for business development, believing that rates will remain at extremely low levels for a very long time. Finally, the government does not know of measures in attracting new financial resources and thus violates fiscal discipline due to the low cost of borrowing.

Smoke without fire. No matter how much Haruhiko Kuroda says about the readiness to expand the scope of QE if necessary, investors understand that the potential of the program and the capabilities of the regulator are generally limited. Rumors of normalization can be a powerful foundation for strengthening the yen. Moreover, the derivatives market increases the likelihood of a reduction in the federal funds rate in 2019 which currently exceeds 15%. Thus, if in 2015 the divergence played on the side of the "bulls" on USD/JPY pair then later in 2019, it may become the trump card of the bears.

At the same time, it is impossible to speak with complete confidence that the pair will go down. To do this, first of all, you need a worsening global risk appetite, which can be based on disappointing macroeconomic statistics for the States and (or) an escalation of the trade conflict. Perhaps, change the arena of hostilities can be an option; for example, the USA and the EU can participate in them.

Technically, the transformation of the Shark pattern in 5-0 continues. If the bears manage to drop the USD/JPY quotes below 110.8 (61.8%) and 109.65 (50%), the initiative will go into their hands. To continue the rally of "bulls", it needs a confident rally to the resistance levels of 112.5 and 113.5.

USD / JPY daily graph