WE HAVE BEEN HERE BEFORE. Both USD and JPY rally sharply against all other currencies as stocks sell-off following Germanys announcement to ban naked shorts against selected stocks & euro bonds. BUT WHAT ABOUT USDJPY ? USDJPY has now lost only 150 pips after the sharp rebound from the May 6 collapse to 87.90. But HISTORY HAS SHOWN that each time USDJPY rebounds following a +5% 1-day collapse (as was the case twice in October 2008), not only the rebounds are short-lived, but renewed sell-off tends to drag back near the previous low. While a break below 90 may not be assured for now, expect USDJPY to reach 91.70, followed by 91.20. Follow us on Twitter for more frrquent uopdates http://twitter.com/alaidi
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