- I’m watching this pair very closely because we are at a crucial area in the form of the 148 yen level.
- The 148 yen level is a large round psychologically significant figure, but it's an area where we've seen a lot of action in the past.
- In fact, we are also approaching the crucial 200 day EMA.
So, I think a lot of things will come together here for a bigger move. If we can break above the 148 yen level, then I think the market goes looking to the 151 yen level and then possibly much higher than that. After all, we've been grinding sideways for a while, and this is a pair that's interesting because interest rates in the United States are climbing via the bond market.
At the same time, we have the Japanese government bonds out there getting “no bid” days, meaning that nobody is willing to buy Japanese debt. If that continues, that means that we have a situation where the Bank of Japan may have to step into the marketplace and buy bonds in order to finance the debt of Japan. That is quantitative easing. That is the purest form of quantitative easing. And that would be the end of any Japanese yen strength.
Looking at the Larger Charts
When you zoom out, you can see that the area that we are trying to escape from has been important multiple times in the past. And this would end up being a triple bottom. Now the question is, do we go to all-time highs or anything crazy like that? Well, no, because all-time highs are about 150 handles north a year, maybe even further than that. But a new high, that's very possible thing here with the 162 yen level being a potential target over the longer term.
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It just comes down to what the Federal Reserve has to do with its interest rate policy. Right now, a lot of people are betting that the Americans are going to start cutting rapidly. The problem is that the economic numbers coming out of America don't necessarily support that argument, at least not for a longer term move. Ultimately, though, I think this is a Japanese yen problem. So on a breakout on the buyer on a pullback towards the 145 yen level and the 50 day EMA by extension. I'm a buyer there on a bounce.
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