Dislikedi am not sure what makes you believe that it is correct to use the word "mispricing" in regards to define market behaviour. i also do not understand what people mean by "fake" when they refer to a specific movement. then the question is what is "real"? what is the "correct pricing"? how do you calculate the correct price? actually the word "price" itself is misleading and inappropriate to use as synonym of "exchange rate".Ignored
A business is worth the sum of all the discounted cash it produces over its life time - some stocks are relatively easy-ish to price. You can never know the exact price, and you don't need to, but you can predict a reasonable range. Most people would say that a business that has assets of 1billion$ but is selling at 100 million$ is mispriced - would you not? If you can buy a business worth 1billion$ for 100million$, you can make $900 million by selling its assets at market value.
Currencies are not easy to value, some believe you can use a weighted exchange rate - I'm not sure. I personally believe that exchange rates are more relative valuation, influenced very strongly by central bank manipulation I.e. will the dollar gain or lose against the euro. The BOJ increased the monetary supply by 30-40% a year since 2012, the yen with its low rates also funded of a very large carry trade. Here you don't know where price will end up at, but you have two very strong reasons to believe that the yen would devalue. That devaluation didn't take place in an instant, it was mispriced compared to the future price. Some believed the yen would be considerably lower in a few years. They were right, does it not seem obvious in hindsight that would be the case? Much harder to make that call real time, hindsight is 20/20 - but some people made that exact call and made a lot of money.
I'm not sure where this discussion is going. Not really one for semantics.