Series
What is this indicator?
As most of naive country-to-country indicators, it does not compare one economy to another. This is more about structural differences in the economies and market regimes.
Japan has had 0% (or negative) interest rates for decades. Investors borrow Yen cheaply to buy US Tech. This ratio captures the friction between those two poles.
Japanese multinationals (Toyota, Nintendo) see earnings explode when the Yen is weak (because they sell in USD). However, since EWJ is priced in USD, a weak Yen lowers the ETF price.
Often, the Nikkei index (in Yen) hits all-time highs, but EWJ/SPY (in USD) stays flat because the currency devaluation cancels out the stock gains.
If BoJ hints at raising rates, the Yen strengthens -> The "Carry Trade" blows up -> US Tech (SPY) drops -> EWJ (in USD) might actually outperform on a relative basis.