Why the USD/JPY Correction Was Inevitable

A week ago, I warned my readers that the vicious sell-off in stocks and currencies was overdone and due for a sharp correction.  The markets have complied nicely and given us large bounces in most asset classes.  Dollar/yen bounced from a low of 141.67 all the way up to 148.22  That is an enormous correction but given the size of the sell-off from close to 162.00 yen per dollar, warning my readers to prepare for this move higher didn’t require particularly astute forecasting.  Rather, it was based on a combination of technical analysis and common sense.  The technical analysis was easy since the short-term and medium-term indicators were all screaming, “CAREFUL, WILDLY OVERSOLD!”  The common sense aspect warrants a bit of further discussion.