The USD/JPY pair shot straight up again during the Thursday session as fears of Bank of Japan intervention and asset purchases will continue to weaken the Yen. The Bank of Japan is by far one of the more aggressive central banks out there as far as working against their own currency, and as such they do tend to move the market with their comments.
Currently, the Japanese are having a bit of a crisis in the government. It appears that the current coalition may collapse, and if that is the case the opposition leader may take over. The opposition leader in charge of the LDS party has already suggested several times that the Bank of Japan should print "unlimited Yen" in order to take care of the Japanese economy. This of course would be very bearish for the Yen, and as such we should see continued selling of that currency.
Unfortunately, the Federal Reserve also likes to print currency. Because of this, the US dollar will more than likely weaken over time as well. However, in this particular moment we have a lot of "risk off" type of behavior. This means that there will be a natural bid in for the US dollar going forward, at least until some of these concerns get taken care of.
Pullbacks
Since we are above the 80.60 level, I believe that we have broken out above significant resistance at this point and time and want to be long of this pair. However, I would prefer to see a pullback first as we have moved so far in such a short amount of time.
Now that we are clear of the 80.60 level, I do believe that the next stop will be 84. In fact, I believe that there is very little in the way of resistance all the way up to that point, and as such I think this will be one of the easier trades going forward. I just don't like to pay up this far for the trade.
If we can get above the 84 handle, I believe that we have a real shot at reaching 105. While this would be a longer-term target, I believe that above 84 we are starting to look at a buy-and-hold type of situation.