The US dollar went sideways during the day on Friday, grinding around just above the 111 level, an area that has been supportive over the last several sessions. Because of this, I believe that the buyers will probably return, driving this market towards the 111.50 level, and then eventually the 112 handle. Given enough time, I think we not only break above there but continue to go much higher as the Federal Reserve is likely to raise interest rates over the next year, while the Bank of Japan certainly will not be doing so. Granted, the Japanese economy has gotten slightly better as of late, but the reality is that it is going to take quite a bit for the Bank of Japan to change its outlook. That being the case, I think that buyers will continue to be attracted to this market, and pullbacks will be looked at as potential value.
This market is obviously sensitive the risk, and therefore depending on what the stock market does, this pair will react accordingly. As stock markets rally, this pair tends to rally as well. Ultimately, I believe that if the stock markets are going to continue to go higher over the longer term, that should continue to be bullish for this pair. I believe that buying on dips continues to be a great way to play this market, and you should be aware the fact that there is a lot of volatility in this market and of course this continues to be one of the things that you must pay the most attention to. That gives us an opportunity to take advantage of dips longer-term, and build up a large position. I believe that the overall trend is changing, and that could be a multi-year event.
Written by FX Empire