Read These Articles – Plan Ahead

The G20 statements more or less give the continued currency war a big fat A O.K – so we can only imagine that the good ol Yen (JPY) will continue to take a pounding. As nothing moves in a straight line… I can’t help but ask “when will we see a counter trend rally?”  but all things considered  – it may not be quite yet. The trade implications could very well co inside with a couple of my previous posts:

Currency Wars – Japan Turns Up The Heat

Here I outlined the topside possibilities  in the pair AUD/JPY being as high as 1.05. As extreme as this may have sounded at the time, the AUD/JPY pair has provided me with some of the largest profits to date – and deserves another look.

Forex – Trade The Fundamentals First

Here I suggested that the long-term trend in the pair USD/JPY has indeed based… and in turn reversed. The trade here has been massive – and as suggested one of the best trade ideas of the coming year.

Blow Off  Top – Retail Bagholders

A caution to readers that we are nearing a near term “topping process” – and that often these moves present a massive “spike” as Wall Street hands the bag to the poor retail guys buying at the absolute top.

Now I can only do my best to put the pieces together as I see things happening in real-time – but should “all things Kong” play out as suggested well……..wouldn’t that be dandy? In all – my suggestion / plan to be 100% cash by mid March is soon upon us so…I will be watching closely and suggest you do the same.

The outcome here (whether it be next week …or a couple more weeks) “should” see a very large move UPWARD in USD ( as fear grips markets and safe havens are sought) as well JPY – coupled with a considerable correction in the U.S Stock Markets and “risk” in general.

As backward as it may seem (and almost “sick” in a sense) in the back of mind –  I am already formulating LONG USD IDEAS.

Positioning for the Perfect Storm: USD Strength and Risk-Off Dynamics

The JPY Paradox: Safe Haven Meets Intervention Reality

Here’s where things get interesting, and frankly, where most traders completely miss the boat. The Japanese Yen sits in this bizarre twilight zone between being a traditional safe haven currency and a systematically debased intervention target. When the next risk-off event hits—and it will hit—we’re going to see this massive tug-of-war play out in real time. On one hand, you’ve got decades of ingrained trader behavior driving flows into JPY during uncertainty. On the other hand, you’ve got the Bank of Japan sitting there with bazookas loaded, ready to obliterate any sustained JPY strength that threatens their export-driven recovery narrative.

This creates an absolutely explosive setup for USD/JPY. The initial move might see some JPY buying as scared money runs for cover, but that strength will be met with such overwhelming intervention firepower that the subsequent reversal could make the current rally look like child’s play. Smart money isn’t going to fight the BOJ when they’re this committed to debasement. The question isn’t whether USD/JPY breaks higher—it’s how violently it happens when intervention meets panic selling in risk assets.

Cross Currency Carnage: Where the Real Money Gets Made

While everyone’s fixated on the major USD pairs, the real action is brewing in the crosses. AUD/JPY isn’t just a trade—it’s a freight train loaded with risk sentiment, commodity exposure, and carry trade dynamics all rolled into one beautiful, volatile package. When risk appetite finally cracks and the equity markets start their overdue correction, AUD/JPY is going to be ground zero for the carnage.

But here’s the kicker: the initial sell-off in AUD/JPY will create the mother of all buying opportunities once the dust settles and intervention kicks in. Australia’s still sitting on a mountain of resources that China desperately needs, and Japan’s still committed to making their currency as attractive as a wet paper bag. The fundamentals haven’t changed—they’ve just been temporarily overshadowed by the risk-off hysteria that’s coming.

EUR/JPY presents another fascinating angle. The European Central Bank is trapped in their own policy prison, unable to meaningfully tighten while Japan aggressively loosens. Any temporary EUR strength during a USD sell-off will be met with the reality that Europe’s economic fundamentals remain absolutely dire compared to Japan’s export-driven momentum post-debasement.

The USD Long Setup: Contrarian Gold

This is where conventional wisdom goes to die, and where serious money gets made. While every talking head on financial television will be screaming about USD weakness during the initial risk-off phase, the smart money will be quietly accumulating long USD positions against everything except JPY. Why? Because when the panic subsides and reality sets in, the US remains the cleanest dirty shirt in the global laundry basket.

The Federal Reserve has actual room to maneuver. US economic fundamentals, while not perfect, are light-years ahead of Europe’s demographic disaster and Japan’s three-decade stagnation story. When global investors finish their initial panic buying of bonds and start looking for actual value and growth prospects, USD becomes the obvious choice. The setup here is textbook: maximum pessimism creating maximum opportunity.

DXY could easily see a violent reversal from whatever lows we hit during the risk-off phase. We’re talking about a potential 8-10% move higher over the following months as reality trumps panic. GBP/USD, EUR/USD, and especially the commodity currencies are going to provide excellent shorting opportunities once this thesis starts playing out.

Timing the Transition: From Defense to Offense

The beauty of this setup lies in its two-phase nature. Phase one is defensive: preserve capital, avoid the initial chaos, and wait for maximum fear to create maximum opportunity. Phase two is aggressive offense: deploy capital into high-conviction USD longs and carefully selected JPY shorts when intervention becomes obvious and sustained.

The transition signal will be unmistakable: coordinated central bank intervention, particularly from the BOJ, combined with stabilization in equity markets and a shift in narrative from crisis to opportunity. When financial media starts talking about “oversold conditions” and “buying the dip,” that’s your green light to deploy the USD long strategy with size and conviction.

Risk management remains paramount, but the reward-to-risk ratio on these setups is approaching historic levels. This isn’t about being lucky—it’s about being prepared when preparation meets opportunity in the most liquid markets on earth.