- You can see that the US dollar rallied a bit during the course of the trading session on Wednesday, as we continue to threaten the crucial ¥152 level.
- The ¥152 level has been like a brick wall for some time, so it's not a huge surprise to see that we are pausing here.
If we can break above here, then it's likely that we go much, much higher. I have no interest whatsoever in trying to get to cute here. I'm not trying to fade this resistance barrier, and I think short term pullbacks will continue to attract value hunters. The ¥150 level underneath continues to be a major support level, which is also backed up by the 50 day EMA.
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The BoJ
The Bank of Japan has recently risen its interest rates, but at this point it looks pretty much like it's going to be more carry trade going forward. You get paid to hang on to this trade, so it makes quite a bit of sense that USD/JPY traders are doing just that. You can also suggest that perhaps the economic data coming out of the United States suggests that the Federal Reserve may have to stay tight for longer.
If that's going to be the case, that's going to put the U.S. dollar in the driver's seat. As far as this pair and many others are concerned, I like buying dips. I have no interest in shorting this pair. And I think that once we clear the ¥152 level, it's very likely that we will then go looking to the ¥155 level above that, of course, is a large round number, and it probably attracts a certain amount of attention. The Bank of Japan has suggested that it is watching the market closely, but quite frankly, that's something they say every two months anyways. They have become the “boy who cried wolf” over the last several years as the debt level in Japan continues to determine how little the Bank of Japan can do.
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