The USD/JPY pair had a slightly positive day for most of the session on Wednesday, but pulled back in order to show the 94 level being far too rich for the buyers. However, this market is most certainly bullish, and we do not have any interest in going against that overall sentiment. Remember, it is the Bank of Japan that has been pushing this market so high, and they have stated recently that they are perfectly comfortable with this pair being at the 100 level. It's only a matter time before the markets push it to that level, as they have the "green light" to do so.
There will be pullback from time to time, but this is simply the nature of trading in general. I look at this as buying opportunities long way and fully expect the 90 handle to continue to offer significant support going forward. Unlike the EUR/JPY pair, there isn't a rush into one of the currencies, so therefore the ascension of this pair will be slower than the EUR/JPY.
Bank of Japan starts a currency war?
The one thing that could get in the way is if the Federal Reserve decides to start training US dollars rapidly again. Remember, the Federal Reserve always friends, it's just a matter of how much. The Bank of Japan has decided to become aggressive in its printing of Yen, and as a result fired a significant shot over the bow of several central banks around the world. The Europeans certainly are not happy about this, as the murmurs of "currency war with Japan" are starting to be heard in the halls of Brussels. The Americans can't be happy about it either, but have not stated anything publicly in one way or the other.
We believe that any supportive candle should be bought in this pair going forward. We also believe that the Bank of Japan will get what it wants before it's all said and done. They have set an inflation target of 2%, which is outrageous when you consider how long it's been since the Japanese economy has had that much inflation. They are going to have to absolutely nuke their currency, and the Forex world knows it. Because of this, I will buy every pullback.