‘Dollar Smile’ Creator Says Yen Intervention Marks the Peak: Is 125 Next?
Eurizon SLJ Capital says the dollar has peaked against the yen after the joint US-Japan yen intervention. The firm sees the yen reaching 125 per dollar, a gain of more than 20% from today.
The market is not listening yet. The yen fell 1% on Monday to 159.27 per dollar, the weakest of the Group-of-10 (G10) major currencies.
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Why Eurizon Believes Dollar-Yen Has Peaked
Stephen Jen, Eurizon SLJ Capital's chief executive, made the call in a Tuesday note with portfolio manager Joana Freire. Jen created the 'dollar smile', the theory that the dollar rises in US booms and global crises but sags in between.
The name comes from the U-shaped curve this traces. His logic here is simple. Both governments have spent real money on the defense, and neither can afford to lose.
"Dollar-yen has most likely peaked, as neither the US nor Japan would give up or concede to the market. … Resistance is futile," Bloomberg reported, citing Eurizon.
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