Geo Chen
· Fidenza Macro
· September 03, 2026 at 16:16
· ⏱ 2 min read
| Read on Substack ↗
Summary
The author argues the Japanese yen may be in the early stages of a secular bottom, using the 2012 USD/JPY reversal as the template: extreme weakness driven by carry-trade unwinding and zero-rate policy eventually reversed only after intervention and a forced policy/flow regime shift. If today's setup really mirrors that phase, yen strength versus the dollar could be underappreciated.
•USD/JPY fell from 124 to 76 over five years after 2007 as the JPY carry trade unwound and the Fed cut rates to zero.
•The Bank of Japan intervened to buy USD/JPY on four separate occasions around the 76 level, treating it as a line in the sand.
•Shinzo Abe's 'Three Arrows' strategy used fiscal-monetary coordination to push rates lower, expand QE, and deliberately weaken the yen.
•Abe convinced Japan's GPIF to cut its domestic JGB allocation from 60% down to 25%, shifting into foreign stocks and bonds.
•Markets front-ran the GPIF shift, pushing USD/JPY up to 120 by the end of 2014.
•The author says he compounded a $50k account into millions by trading the 2012 USD/JPY bottom and now sees a similar bottoming process in the yen.
Read time2 min
Length2,544 chars
Categoryfinance
Ideas
Geo ChenGlobal macro trader; ex-head of FX trading, Credit Suisse
The author opens by saying 'Something tells me we are witnessing a bottoming process unfold in the Japanese yen' and draws a direct parallel to the 2012 USD/JPY bottom at 76; if the analogy holds, yen
The author opens by saying 'Something tells me we are witnessing a bottoming process unfold in the Japanese yen' and draws a direct parallel to the 2012 USD/JPY bottom at 76; if the analogy holds, yen appreciation versus the dollar is the logical market implication.
Risk: The visible article does not specify today's catalyst; the 2012 reversal required repeated BoJ intervention and a major Abenomics/GPIF flow shift, so the analogy could fail without a comparable policy trigger.