The US dollar rallied against the yen on Thursday, as rates continue to drive the US dollar higher in general. At this point, the market looks to break much higher at this point.
USD/JPY
The US dollar rallied against the Japanese yen rather significantly during the trading session on Thursday as the interest rate differential continues to play out in this pair. Quite frankly, this is a market that is likely to continue to be very noisy, and I think over the longer term go much higher.
So, with that being said, this is a market that continues to attract buyers on dips, and this is a position that I have been long of for quite some time. In fact, the market has offered opportunity after opportunity anytime the Japanese try to intervene, which is a bit ironic considering that is the biggest concern I hear from traders around the world. The fundamental situation continues to favor the US dollar and will probably favor the US dollar for quite some time.
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Multi-Year Rounded Bottom Targets 225 Yen Level
With that, when you look at the longer-term technical pattern, the rounded bottom that goes back to somewhere around 1991, it actually measures for a move to roughly 225 yen. I know that sounds wild, but over time, I don't see that as a problem. This would be a multi-year move, obviously.
And as such, I have been adding to my position as we go along. This has turned into an investment, and therefore my position sizing has been very steady and measured. I have not thrown tons of money into the market at any one given moment, as this is a longer-term trade I'm willing to really hope to see play out. Interest rates rising in the United States are only going to exacerbate this, and that's exactly what you've seen during the day on Thursday.
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