More Downside for the Yen ETF?

Until recently, the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) was one of this year’s best-performing currency exchange traded funds, but that status started to change for the worse recently amid speculation that the Bank of Japan has more easing efforts left in its tank.

The yen and FXY have been bolstered by investors’ thirst this year safe-haven assets, a desire that appears to be growing stronger in the wake of Great Britain’s decision, revealed late last week, to depart the European Union (EU). That is to say betting against the yen has not only been difficult, but wrong.

Related: Japan’s 2016 Monetary Policy: Mistakes and Missed Opportunities

However, elections in Japan last week underscore the point that FXY’s recent declines could be a sign of things to come. Prime Minister Shinzo Abe’s ruling coalition, like-minded parties and independents won a two-thirds “super majority,” Reuters reported. Abe’s Liberal Democratic Party was one short of winning a simple majority.

The win would allow his administration to push ahead with constitutional reforms, notably restraints on its military. Abe also promised to take action on the economy, with a “swift formulation of comprehensive, bold economic measures.”


On the USD/JPY, daily chart “we can see a persistent downtrend. Recently, there is a bullish divergence between lower lows in the currency but higher lows from the 20-day momentum study in the lower panel. This is not a big bullish divergence covering several months, but it is a start,” according to