The US dollar has drifted a bit lower against the Japanese yen during the trading session on Tuesday, reaching down towards the 113.25 region. However, this is a market that will have a significant lack of volume during the day, and it makes sense that we could perhaps see very little in the way of trading action over the next couple of days. I believe that the 113-level underneath is going to be supportive, just as the 112-level underneath there will be as well. I think pullbacks continue to offer value, as the US dollar will continue to be supported by higher interest rates coming out of Washington. If we get more of a “risk on” move around the world, especially in the stock markets, it’s likely that the USD/JPY pair will continue to rally as it always has in the past.
Longer-term, we can break above the 115 handle should send this market much higher, and more into a “buy-and-hold” scenario. At that point, I would anticipate a move to the 120 level without too many issues, but with the typical volatility that we see repeatedly. If we were to break down below the 112 level, that could be very negative, perhaps sending this market down to the 111 level after that. There’s plenty of noise out there, so you should keep your position size a bit light, and only add once the market has moved in your direction. Probably the best way to trade this market, and with a little bit of patience you will be able to build up a large position and profit quite handsomely.
Written by FX Empire