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USD/JPY Forex Signal: US Dollar Continues to Find Buyers Against Yen

Potential signal:

  • I am a buyer of this pair, right here, right now.
  • I would have a stop loss at the ¥159.50 level, and would be aiming for a move to the ¥165 level.

USD/JPY Signal Today- 08/07: USD finds buyers vs JPY (Chart)

  • I see that the USD/JPY currency pair has found quite a few buyers on a pullback, and therefore it’s likely that we will continue to pay close attention to the ¥160 level as far as this asset is concerned.
  • In general, this is a market that has been in an uptrend for quite some time, and I think that continues to be the main point here.
  • After all, this is a market that I think continues to see a lot of volatility, but at the end of the day, you get paid to hold on to this pair, so it does make a certain amount of sense that buyers came back in and picked up “cheap greenbacks” at the end of the session.

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    Carry Trade

    Don’t underestimate the need of traders to pay attention to the interest rate differential, because you do get paid to hang on to this pair. In fact, that’s been a huge reason why the pair has gone higher for quite some time. The market breaking down below the ¥160 level would open up the possibility of a move down to the 50-Day EMA, near the ¥157.75 level. All things being equal, this is a market that given enough time I think that there would be plenty of people willing to take advantage of any dip, because the interest rate differential is so wide.

    The Bank of Japan has absolutely no possibility of raising rates anytime soon, due to the fact that the amount of debt in Japan is just simply unsustainable at a higher interest rate. Because of this, the currency will continue to get beaten by just about anything, including the US dollar which is backed up by the Federal Reserve and the fact that they are nowhere near cutting significantly. Even if they were to do one interest rate cut between now and the end of the year, that’s only 25 basis points more likely than not, meaning that you could still drive a truck through the interest rate differential of this pair.

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    Christopher Lewis
    About Christopher Lewis

    Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

     

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