USD/JPY: Low Vol Gyrations As ‘True Risk Off’ Dominates

Fairly balanced flows as both currencies benefit from cross-asset flows. The DXY spike post ECB offsets the textbook ‘true risk off’ move by equities and fixed income.

The next focal point includes the US NFP figures. One must be prudence if exposure heading into the high-impact volatile event. A headline number of 181k is expected.

The contained pullback at times of ‘true risk off’ bodes well for the pair conditioned to the benign outlook in the DXY. A recovery in equities and/or yields necessary to resume uptrend.

The corrective nature of the price action in the last week vs impulsive rally from late Feb suggests the order flow is still very much constructive of higher prices.

The loss of correlation between the pair and the DXY is simply a reflection of the ‘true risk off’ nature of the current market conditions, where the Yen tends to be king despite a rising USD.