(Bloomberg) --
The dollar’s impressive rebound last week versus the yen may be just that: a rebound.
The greenback has rallied about 5% versus the Japanese currency since hitting a three-year low last Monday at 101.19. It may be due to pare a large part of that advance if technical analysis is anything to go by.
The so-called Downsize Tasuki Gap, or Bearish Tasuki Gap, was formed on the dollar-yen weekly chart on Friday, suggesting the yen is about to strengthen versus the U.S. currency. During the last 40 years, this pattern has only been completed once on a weekly basis, back in 2012, heralding a 4.5% drop in the dollar over a period of five weeks.
This shows that dollar bears are still in control of price action and that it will probably fall further against the yen.
- NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
To contact the reporter on this story: Vassilis Karamanis in Athens at vkaramanis1@bloomberg.net
To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Neil Chatterjee
©2020 Bloomberg L.P.
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