- The USD/JPY initially fell during Thursday's trading session, but there are reasons to be optimistic about the pair's prospects.
- The 50-Day EMA and the 200-Day EMA indicators are both sitting just below the candlestick for the day, providing significant support.
- The pair has also been making "higher lows," indicating that it is only a matter of time before it turns around and reaches the top of the triangle.
If the pair breaks out to the upside and clears the ¥138 level, it could potentially reach the ¥146.50 region in a "measured move." However, the market is likely to face some challenges along the way. Nevertheless, there is likely to be a significant amount of buying pressure over the longer term, making this pair an excellent option for a swing trade.
The Bank of Japan is likely to continue its yield curve control scheme, keeping the cap of 10-year JGB at 50 basis points. The central bank will intervene in the market by buying bonds if yields get too high, which will require printing more currency. This policy has flooded the market with supply and weakened the Japanese yen. On the other hand, it is unlikely that the US dollar will lose strength anytime soon, as the Federal Reserve continues its tight monetary policy and has raised interest rates once again. There is still a significant interest-rate differential between the two economies.
Longer-term Bullish Prospects are Supported
Traders need to be aware of the potential opportunities and challenges that the USD/JPY pair presents. By monitoring the market closely and staying informed about global economic trends and geopolitical events, traders can increase their chances of success. It is essential to keep an eye on the Bank of Japan's policies and actions, as well as the Federal Reserve's monetary policy decisions. As the Fed has just raised rates and also stated that cutting rates aren’t even a thought, this can continue to cause upward pressure on the USD, especially against the JPY.
At the end of the day, providing opportunities for traders. The pair's longer-term bullish prospects are supported by the Bank of Japan's yield curve control scheme and the Federal Reserve's tight monetary policy. Traders should be prepared to navigate the challenges and opportunities that lie ahead by staying informed and monitoring the market closely.
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