The USD/JPY pair was slightly negative on Tuesday, as the market continues to be volatile, but as we wait for the results of the Federal Reserve meeting, it should be noted that this is going to be very influential on this market. I believe that the Federal Reserve may have trouble raising interest rates in the environment post hurricane, so I think that the pair may struggle a bit. Interest rate differentials between the United States and Japan should continue to be reasonably strong, but I believe that out of all of the young related pairs, this could be the under performer. However, the Federal Reserve sounded hawkish at the meeting, that could send this market straight through the roof. I doubt that’s what happens though, and I think that most of the market feels the same way.
Longer-term bullish, but expect noise
I believe that short-term pullbacks are buying opportunities, but when I look at the longer-term charts, I cannot help but notice that the consolidation continues to hold the market in check, and I think that the 108 level underneath should continue to be massive support, and I think that unless the Federal Reserve expands its quantitative easing, it’s likely that the level should hold. I think the given enough time, we should try to grind higher but it’s going to be difficult. You have to think of this pair more as an investment at this point than anything else. I expect weakness in the short term, but if we can find some type of support, I’d be willing to put a small position on. Ultimately, I believe that if you are trying to short the yen, you should probably do it against the higher flying currency than the greenback.
Written by FX Empire