- The USD/JPY pair went back and forth Tuesday in relatively quiet behavior.
- The market has been grinding away to the outside and in a relatively subtle angle.
- The market has been in a bit of a channel, so I will be paying close attention to it.
- The ¥136 level seems to be rather supported, so we will have to wait and see whether or not we can stay above there.
Breaking Above ¥136
Breaking higher could open up the possibility of a move to the ¥140 level, which is a large, round, psychologically significant figure, and an area that we had pulled back from just below recently. Ultimately, the markets will continue to see quite a bit of volatility, but more or less forming a very tight range in this pair. After all, the Federal Reserve continues to tighten monetary policy while the Bank of Japan does everything it can to loosen monetary policy and keep interest rates extraordinarily low in that country. They are basically “printing unlimited yen”, and the fact that we have seen the yen lose so much in the way of value should not be a very big surprise.
If we were to break down below the bottom of the channel, then the 50-day EMA comes into the picture, which is right around the ¥134 level. That is an area that I think a lot of longer-term traders will pay close attention to, but even if we break it down below there, I think it is likely to find plenty of buyers underneath. In fact, I think there is support on the way down to at least the ¥128 level, so of course, I will be looking at dips as potential buying opportunities.
On the upside, if we can break above the ¥137 level, then I think we continue to grind higher, perhaps reaching the top of the channel. After that, the ¥140 level would be targeted as well. I do believe that every time we pull back, there should be buyers willing to jump in and pick up a bit of value. Regardless, unless we see some type of major change in the attitude of the Federal Reserve during the Wednesday announcement, I think that the overall trend continues in this pair going forward.
Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.