EURJPY, tails

USDJPY was trading in its range and suddenly it broke it in September 2008 and continued down till November 2009. We could understand some of the reasons for this behaviour: the unleverage of the world due to the financial crisis. Japan has always been considered a safe haven when things get rough. So in a sense, it shouldn´t go worse.

But, what if the logic behind the rise in yen comes from a huge bet on yuan appreciation? As the Chinese currency cannot be traded, people use JPY as the benchmark, so if you think the yuan is undervalued, you may well buy yens. That would make sense and be worrisome at the same time.

On the other hand, the USD should go up against EUR, so that won´t help the EURUSD either.