What's interesting now is the Yen started selling off in February. Here are three possible reasons to explain this. Which is right? We will find out. 1) Risk appetite is coming back to the market with people building Yen carry trades. 2) The Yen lost it's safe haven status. 3) Yen Intervention threats.
Now to the Yen/Nikkei relationship. Looking at the chart below the Nikkei is sitting at levels not seen since October 1982. It's also down 81% from the 1990 peak! The Japanese Government is trying to stimulate its economy by "buying commercial paper, corporate bonds, and stocks from financial institutions to try to help infuse money into companies" (1, 2) and possibly intervene in the forex market to lower Yen/stabilize exports. Last month the Yen sold off while the Nikkei made lower lows (chart). Looking at the Yen/Nikkei relationship historically they either moved together or were inversely related. It will be interesting to see where commodities and the US Dollar go from here and how the Nikkei will be involved.
When will the Yen reach a point where Japanese exports catch a bid? As with the U.S market, wait for the Nikkei to base out and make higher lows w/ volume before scooping up a protected iShares MSCI Japan Index (EWJ) long position (not a recommendation)