Quote from btud:
I think the interest rate decisions are more likely to act at the medium term level, where carry trades are. I don't know for sure what are the more fundamental forces that determine the long-term downtrend. I have just pointed out that it exists. If I was to guess, the yen tendency to appreciate should have something in common with all Asian currencies tendency to slowly appreciate over time. It may be related to the fact that all economies in the region produce more than they consume, while in US things are reversed. It may also have to do with a slow decrease in interventionism by the governements, which means a slow approach to an equilibrium rate. This is marked by periodic retracements, which may be triggered by medium-term events, like interest rate cycles or intervention by central banks.
If you look at the monthly chart since 1980 we had a long series of lower highs: peak at 278 in 1983, then 263 in 1985, then 161 in 1990, then 148 in 1998, the last major one being 135 in 2002.
At this point the price seems to try to make the next top. In case it goes beyond 135, the secular downtrend is over. But until then, the long-term bearish view remains. As I have said, I don't think we'll go beyond 125 in this wave, because of medium and short-term resons (which include the recent recovery in Japan economy, the start of tightening, the overuse of the yen carry in the last years, the overvaluation in crosses and the extreme speculative positioning).
