The USD/JPY pair went back and forth during the course of the session on Wednesday, as we continue to hang about the 118.50 level. With that being the case, the market looks as if it is going to continue to struggle in the short-term, but I still believe that we go higher over the longer term. With that being the case, I feel that the market will then head to the 120 level, and then possibly the 122 level given enough time. I think the pullbacks continue to offer buying opportunities,
I believe that there is plenty of support all the way down to the 115 level. However, I believe that there is a little bit of a buffer above the 115 level that extends all the way to the 116 level, so having said that I believe that we will see the buyers return to this market every time it falls, as it should ultimately break out to the upside.
Interest-rate differential
The interest-rate differential between these two currencies and countries should continue to expand, and that being the case, of course we will continue to see money flow into the US dollar and away from the Japanese yen. On top of that, you have to keep in mind that the more that people are willing to risk, the higher this pair goes. With that being the case, the market should continue to go higher every chance he gets, and as a result longer-term traders are probably already long. After all, we have been grinding sideways after an impulsive move higher, which of course is pretty common to see.
If we break down below the 150 level, it would of course change a lot of the scenario in scenery, but I still think that ultimately this pair has to go higher. If it doesn’t, we will more than likely have had some type of financial meltdown again. Unless of course that happens, this pair will have a slightly upward bias.
