“Some people have said the carry trade is over,” says David Powell, currency analyst at Ideaglobal. “That is certainly open for debate.”
It is reasonable to assume that many speculators have been pushed out of the market by the recent price action. In fact, some analysts cite the latest CFTC Commitment of Traders (COT) data released on Aug. 24, which showed that both small and large speculators are now actually net long yen futures.
“The yen carry trade is over.” Woolfolk says. “We think fair value for dollar/yen is much closer to the 100 level.”
Woolfolk says the euro/yen seems to have stabilized between 150.00 and 160.00, but predicts a break of 150.00.
“Be more wary of the carry trade — don’t look at it as a one-way bet,” Staskow says.
Over the near term, she forecasts potential consolidation for dollar/yen between strong support at the 110.00-111.00 level and resistance in the 116.00-117.00 region. Staskow sees potential for the euro/yen pair to retreat to the 145.00-150.00 range by year-end.
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