- The USD/JPY had a bit of a tough time during the early hours of Thursday's trading session, slipping below the ¥142 level. Now, there's a bit of uncertainty about whether it can hold onto this position.
- We're hovering around a significant trend line, but we're also below the 200-Day Exponential Moving Average. What's catching the attention of market watchers is the upcoming meeting of the Bank of Japan next week.
- If the Japanese decide to change their monetary policy, it could have significant implications, especially since the Federal Reserve seemed more inclined toward easy money policies on Wednesday.
Short-Term
In the short term, it's likely that we might see the US dollar's value decrease a bit, but it's important to remember that the Japanese yen can be a bit unpredictable. Ultimately, the focus remains on the bond markets and the statement that will come out of Tokyo next week. Now that the Fed has shown willingness to accommodate Wall Street's desire for cheap money, it hinges on whether Tokyo will follow suit. If they do, it could have a major impact on the Japanese yen, but it's not certain given their history of loose monetary policies. Because of this, I think there are a lot of people out there who are uncertain, and therefore I am a bit cautious about getting involved at the moment. After all, we are also getting close to the lack of liquidity time of the year. The market will obviously have a lot to deal with next week that could be influential for the following year.
The current situation suggests that everyone is waiting for the Bank of Japan's decision, and afterward, we might see some sudden movements, but that could be followed by a slowdown as we head into the holiday season and liquidity decreases. Right now, I'm not overly enthusiastic about trading this pair because there's a lot of uncertainty next week. In the short term, expect a fair amount of ups and downs, and at the moment, it seems bearish. If I had to trade, I would look for a breakdown to take advantage of. But remember, there could still be opportunities for gains if you're patient and hold onto the pair in the long run.
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