Modern-day currency markets rarely witness history when an old period ends and new period begins. New periods were seen in the 1970's and 1980's on average every 5 - 6 years but then the periodic time frames were extended. with not only currency price understanding but indicators and math models were developed to contain currency prices through buys and sells. Further, central banks played a greater role in their currency prices for purposes to contain their paired prices. The last period was seen from 1998 - 2008 then a new period began in 2008 to present day.
As Yen cross leader for the past year, the GBP/JPY break of 170.83 signifies not only will EUR/JPY break 132 but it will complete an end to the last era to begin a new period. Traditionally, EUR/JPY was always the market leader because it was the most widely traded but GBP/JPY held sway because it shared different, "funny" and revolving correlations.
Current volatility increased for a reason and its a message to the markets that a new transitional period is developing because no better forward instrument, early warning system or economic document exist than a currency price. Its a guide to the future. During volatile periods, currency pairs marry and divorce as they undergo the new transition to the next period. Once EUR/JPY breaks 132, the markets formally entered the new period and never to see a return for many many years. With central moniroting of their currncy prices, the next period may extend to 10 + years.
When AUD/CAD broke 0.9920 for example, the message was clear to sell EUR/USD, GBP/USD, AUD and NZD because risk was teken from the markets by the 0.9920 break.is it any wonder CAD/ZAR rose to 10.00 + in risk off markets, NZD/CAD to 0.9700 highs. In new risk markets both must drop significantly but so must EUR, GBP, AUD and NZD/USD rise
The new period will be marked by not only ability to take on risk but present volatility is nothing compared to what's ahead. Volatility always increaes when risk ability is placed in the markets and this is where we are heading. That means we revert back to prior 2008 trading. It also means USD/JPY is extremely vulnerable. Afterall, price skyrocked from 75.0 lows in 2008 to present 107. Historically, USD/JPY is not only overbought but its scary to see such a currency pair at such exorbitant levels. Likewise, EUR, GBP, AUD and NZD are not only prime for takeoff but historic bottoms are very close. The next period will see true and certain trends.
Currency prices are slow to move so my forecast will take time. When EUR/JPY breaks 132, the old risk off period is gone and the new begins.