First there was "long social-media", then "short bonds", and now - as Credit Suisse notes - the next "pain trade" appears to be building in USDJPY (which is very worrisome for broad risk assets in general).
Credit Suisse - The next "pain trade" ?
As we have highlighted on several occasions, one of the reasons we have been looking for lower US yields (besides a yield top for 5yr5yr US and rising US Duration Risk Appetite) has been positioning and the "pain trade", and we believe we may well have the same conditions in USDJPY.
[3]
Here, the market continues to weigh heavily on a cluster of pivotal supports at 101.23/100.75 – the repeated series of lows for the year from February, March and April, the rising 200-day average and the 38.2% retracement of the June-13/January-14 uptrend. A break below here, which we think increasingly likely, would see a top, warning of a potentially aggressive move lower.
Below 100.75 (and probably now 101.20) would see a top confirmed to target 99.63 initially, ahead of the 61.8% retracement of the rally from last June at 98.25. While we would look for this latter level to hold at first, a break in due course can target 96.57, and eventually 94.65 – the 38.2% retracement of the entire rally from September 2012.