The USD/JPY pair shot straight up during the session on Wednesday as the Federal Reserve looks to expand and extend quantitative easing going forward. This is almost always indicative of a “risk on” type of trading environment, and this could be the catalyst, or at least half of it, for a much higher print in this market.
If the Bank of Japan follows through with the actions that the market expects him to, we could very well see this pair finally break out above the 84 handle. If and when that happens, this would be a massively important signal in this marketplace as we would see this pair go much higher next year.
Because of this, we are very bullish of this pair and suggest that anytime the pair pulls back it is a buying opportunity right now. This market looks set to take off in the near-term, and if we do get that breakout, we believe that this is not only a buy-and-hold type of market, but could see this pair races high as 110 over the course of 2013.
We believe that this pair will be one of the markets to follow during next year, and as such many traders are positioning themselves right now. This could be the end of the downtrend, and if that’s the case this market could surprise most if not all traders as we get deep in the 2013.
All of this is going to depend on the Bank of Japan more than anything else the right now, and as a result we need to see them forced into a position to ease even more after the election on December 16 in that country. If the opposition leader Mr. Abe wins, there is a very strong chance that the next Japan will be pressured into printing “unlimited Yen” as he has stated more than once. Being an export economy, they need that to happen in order to devalue the Yen and open up the American markets to their exports in a competitive pricing situation. With all this being said, we do believe that this pair goes much higher.
Written by FX Empire