Potential signal:
I am a buyer on a break of the ¥157 level. I would have a stop loss at the ¥155 level, and would be aiming for the ¥159.50 level.
- The US dollar has rallied a bit against the Japanese yen during the early hours on Wednesday as we continue to see the interest rate differential because quite a bit of inflows.
- At this point, the market looks very much like it’s going to remain a “buy on the dips” scenario, as traders continue to get paid for holding onto it.
It’s probably worth noting that the Bank of Japan has no real business trying to tighten monetary policy due to the fact that the Japanese government is up to its neck in debt. As Japan is one of the most highly indebted nations as far as developing economies are concerned, they simply cannot for the higher interest rates as it could cause a massive meltdown in the bond market. Ultimately, I like the idea of taking advantage of value here, especially as the Federal Reserve is likely to continue to be tight going forward.
You Get Paid at The End Of Every Day
You get paid to hold this market at the end of every day and it’s probably worth noting that institutional traders are very well aware of this. This is something that they do find attractive, as it is more of an investment and less of a short-term trade like most retail traders tend to think of. Because of this, the market is likely to continue to see upward pressure, but that doesn’t necessarily mean that we are going to go straight up in the air forever. I think at this point any pullback will end up being a buying opportunity with the 50-Day EMA sitting just below the ¥154 level. Anything below there would be a bigger deal, but at this point in time it seems very unlikely that we will see that happen. This is especially true as we head into the end of the Wednesday session as you get “triple swap.”
I have no interest in selling this market, at least not until we break down below the 200-Day EMA which is close to the ¥149.33 level and is essentially miles the lower we are currently trading in this market. If we break higher from here, then we could very well continue to go higher.
Ready to trade our Forex daily forecast? Here are the best forex brokers in Asia-pacific to choose from.