The USD/JPY pair has been bullish during the session on Tuesday, testing the 114.50 level. I still believe that the larger resistance is at the 115 handle, so if we can break above there, then I think it’s a longer-term “buy-and-hold” situation. However, in the meantime I think that we may get pullbacks from time to time that offer value propositions. What could dry this market today is Janet Yellen speaking in front of U.S. Congress, and perhaps sounding more hawkish than the markets believe. I think longer-term, we will eventually break out to the upside but we may need to pull back to build up enough momentum to finally break through that barrier. Once we do, I think that the next target will probably be closer to the 118.50 level above.
I don’t have any interest in selling this market, I believe that there is more than enough support underneath. I believe that the 114 level is going to be massively supportive, and I believe that the buyers will look at this market as offering value in that region. If we did breakdown below the 114 level, I think that there’s even more support at the 113.50 level underneath. Given enough time, I anticipate seeing this market breaking out, and reaching towards the upside for a longer-term type of move. The pair is highly influenced by risk appetite around the world, so pay attention the stock markets, with an emphasis on the S&P 500. Interest rate differentials between the 2 countries still favor the US, and will continue to do so for the longer term, so I believe that the market continues to look very bullish given enough time. I have no interest in shorting, I think that this pair is trying to break out for longer term trading.
Written by FX Empire