Optional USD/JPY traders show some signs of fatigue, indicating that the current yen rally against the dollar is closing. The one-month USD/JPY Risk-Reversal that shows the difference between the volatility of Call and Put on the currency pair is upward from 4 consecutive days until the USD/JPY spot rate is down.
Statistics show that when the optional market moves in a different direction from the spot rate, it leads to a trending brother and traders have to seriously pay attention to this.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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