By: DailyForex.com
USD/JPY rose during the session on Thursday, as the US dollar did fairly well against all currencies it seems. However, you can see that once the market plowed into the 98 handle, it found significant resistance and the market pushed back. That being the case, I feel that we could get a little bit of a pullback at this point in time, and based upon the shape of the candle, it seems of the technicians agree. However, I do not expect this pullback to be of a great magnitude, and more than likely should provide a nice buying opportunity.
With the way that the Japanese Government Bond market has gone lately, it's hard to tell what could happen in the short term. However, I do understand that the longer-term Outlook for this pair is definitely to the upside as the interest rates in the United States are rising, while the Bank of Japan is just now starting to buy more bonds. With that being the case, the interest rate differential alone should keep propelling this market higher.
Keep in mind this market is trying to reverse a massive move.
We see the choppiness in this pair, don't despair. I believe that this market is indeed trying to substantiate a longer-term uptrend, but you have to keep in mind that this pair has been in a downtrend for several years and sold off massively. In other words, there are massive amounts of money to be unwound from this market in order to let it go higher. It makes sense that this pair will be choppy the time, and this is especially true when you think about the fact that the Bank of Japan is one of the major reasons why is going higher. After all, any time you are relying on the actions of someone else, you have the ability to see the markets act crazy as they try to anticipate what that central bank governor actually means. Because of this, expect volatility, but I am still buying on dips that show signs of support.
