Strategist: Where the Yen Is Headed Now

Japan's Prime Minister Shinzo Abe
Bloomberg | Getty Images
Japan's Prime Minister Shinzo Abe

If you bought the dollar against the yen before recent elections there, you're probably feeling pretty good right now.

Just don't rest on your laurels, says Jens Nordvig, global head of FX strategy at Nomura Securities.

Now that the Bank of Japan has held its long-awaited meeting, and announced stimulus measures and a higher inflation target, "we may be running out of catalysts for additional yen weakness in the short term, and we think it is quite likely that the yen gets stuck in this range for the time being," Nordvig writes in a note to clients.

Markets were expecting big stimulus moves from the Bank of Japan, and they are underwhelmed today. Nordvig thinks he knows why.

"The BOJ meeting overnight was an interesting compromise," he says. "On the one hand, it contained a historical shift to an explicit 2% inflation target and a shift to open-ended asset purchases. On the other hand, the additional balance sheet expansion announced was moderate," and will not even begin until 2014.

(Read more: Quantitative Easing: CNBC Explains)

So Nordvig thinks the dollar-yen trade may be running out of steam, and the pair may be stuck in a range for some time.

The bottom line: if you're in the trade now, it's time to move on.

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