The USD/JPY pair initially dipped on Wednesday, but then found enough buying pressure to reach towards the 111.75 level. As I write this, it looks as if we are trying to pull back a bit, but the volatility should continue to push back and forth. I think that eventually we will reach towards the 112 level, and then possibly even the 112.50 level after that. I think that the interest rate differential will continue to favor the United States, and of course the Federal Reserve looks very likely to raise interest rates long before the Bank of Japan will ever even think so. Because of this, I am bullish of this pair but I recognize that we may need to pull back to find enough value to go long of this market, and I believe that the 111 level underneath will be support.
Longer-term uptrend?
I believe that longer term we may be getting ready to see an uptrend happen, and with this being the case, I think that the market will then eventually go to the 115 level over the next several months. I believe that the 110 level underneath is the massive floor in the market, and that being the case it’s likely that the pullbacks offer enough interest for the buyers to get involved. I think that the Japanese yen itself will start selloff if the stock market around the world starts to rally, it’s very likely that we will go higher here, as well as the other Japanese yen related pairs. The US dollar gets the added benefit of US stock markets doing better than most others, and of course the previously mentioned interest rate outlook for the Federal Reserve over the next couple of years going forward.
Written by FX Empire