- The dollar-yen pair initially pulled back just a bit during the trading session on Thursday only to bounce again.
- Ultimately, this is a market that I think continues to see a lot of support underneath, especially near the 152 yen level.
- Now that we've broken through this 152 yen level, it is a sign that we are going higher. After all, the Bank of Japan has absolutely no recourse to this.
A little bit of intervention would probably only anticipate more buying down the road. There isn't a whole lot they can do. The interest rate differential continues to pay people to own this pair. We are going to the 155 yen level, given enough time. The 152 yen level now should have a lot of market memory attached to it, so if we get anywhere near there, I'm a big buyer. I'm a buyer already. I'm already a long in this pair for the last several months and just added more over the last 24 hours.
The Crucial 155 Yen Level
At 155 yen, I anticipate a little bit of psychology to come into the market and offer short-term resistance. Nonetheless, there's nothing there that tells me that we can't go higher. Really, at this point in time, with inflation numbers in the United States remaining pretty stubborn, the reality is that the Federal Reserve may not be able to cut at all this year. And if that's the case, the Bank of Japan has a real problem on its hands due to the fact that it has an enormous amount of debt to finance. With that being said, they cannot handle higher rates. I do believe we continue to see the US dollar climb against the Japanese yen and several other currencies will behave the same as well.
This is a currency, the USD/JPY that simply cannot get off of its back, and I think this continues to be the case going forward. The market remains a “buy the dips” market, as it has been for quite some time.
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