USD/JPY is a middle currency pair, its a neutral currency pair. Cross pairs GBP/JPY, EUR/JPY and CHF/JPY trade above while CAD/JPY, AUD/JPY and NZD/JPY trade below.
The purpose of JPY cross pairs is to forecast USD/JPY. For GBP/JPY, EUR/JPY and CHF/JPY forecast bottoms only while CAD/JPY, AUD/JPY and NZD/JPY forecast bottoms and crucial topside resistance points.
Why JPY cross pairs forecast USD/JPY is because JPY cross pairs are attachment currency pairs and attached by design after WW 2 to ensure Japan and JPY’s survival as a nation and currency. Legacy truly matters to exchange rates.
What differed from DEM/USD to EUR/USD was a name change but the legacy exchange rate number remained the same. For a central bank to change its exchange rate numbers then the entire system of exchange rate numbers must change accordingly to ensure corrected numbers and currency market stability and trade ability.
The 2020 USD/JPY forecast by banks is 99.00. We’ve seen these thin air forecasts before and as usual, banks and forecasters were wrong. No such number will trade nor will USD/JPY come close to 99.00.
Best USD/JPY price is 104.00 and 102.00. And not much changed since my past yearly forecast articles to forecast 104 and 105 USD/JPY. For 2018 and 2017, USD/JPY bottomed exactly at 104’s.
JPY cross pairs is the main reason why 99.00 and 1000 pips won’t trade as 99.00 USD/JPY lacks compliance to its cross pairs.
From JPY cross pairs individually, GBP/JPY offers a contribution of 700 pips, NZD/JPY at 500, AUD/JPY at 400 then EUR/JPY and CAD/JPY at 300s.
CHF/JPY contributes to USD/JPY the least at 150 pips. CHF/JPY is traditionally a trending currency pair and at 150 pips, no real trend is seen. if the nearest exchange rate number to USD/JPY forecast slow movements and the highest GBP/JPY at 700 pips then 2020 reveals more of the same for USD/JPY.
More of the same means, why trade a neutral currency pair when trade in JPY cross pairs offers much more opportunity.
The purpose of this and other articles possibly to follow is to bring clarity and understanding to trading and exchange rates, respectfully a topic miles away from most trader and forecasters conception.
For example, early assessments from EUR/USD and EUR/USD purpose is to forecast EUR/GBP. This informs how vital and protected is EUR/GBP to overall EUR currency pairs.
A reason exists to each of 28 currency pairs and exchange rate numbers as all fit perfectly into the matrix of trades and trading to form a perfect market. Each exchange rate number corresponds perfectly to the next exchange rate number.
Exchange rates forecast perfectly exchange rate entries and targets. Any math formula, modern day indicators, chart readings on the planet can’t stand against exchange rates forecast exchange rates.