USD/JPY trading the past few years has been its most sedate ever, with the average true monthly range plunging to below 3 yen from a 2016 peak above 7 yen, but the bottom of these ever-tightening ranges looks about to fall out.
Fed tightening since 2015, until last week's first rate cut since 2008, has kept USD/JPY aloft, albeit with successively lower highs.
The BOJ policy rate at -10bp has been in place since 2016.
Yield curve control followed in September 2016, limiting 10-year JGB yields to a 20bp range straddling zero, since doubled.
This week's risk-off flows have probed the -20bp YCC range, but 10-year Treasury-JGB yield spreads have tumbled to their lowest since September 2016 as the global scramble for safe yields and expectations the Fed will cut rates by 1% within a year far outweigh the one 10bp rate cut priced in for the BOJ by January and YCC limitations.
The last two times USD/JPY broke out of ultra-tight long-term ranges, in December 2012 and July 2007, prices rallied 45% and fell 35%, respectively.
The measured objective for the current head-and-shoulders reversal pattern is 27% below current levels and near December 2012's upside breakout.