The USD/JPY pair went back and forth during the session as the pair has broken out over the last 24 hours. That being said, we have been waiting for daily close above the 99 handle, and we have finally gotten it. With that being the case, we feel that this market will continue to go higher and will eventually go as high as 101.50 in the short term, and quite possibly much higher over a longer-term.
Looking at this chart, it appears that the former downtrend line should now act as dynamic support, so any pullback at this point time should be looked at as a potential buying opportunity, and with the Federal Reserve looking to possibly taper off of quantitative easing, the US dollar could continue to gain strength against the Japanese yen, as well as many other currencies around the world.
Looking at this market overall, this will more than likely be the best-performing market in a situation where the Federal Reserve tapers off of quantitative easing, as the Bank of Japan is simultaneously working against the value of the Yen, creating a “perfect storm” in this marketplace as the US dollar should appreciate in value, while the Japanese yen will most certainly devalue over time. The Bank of Japan is currently purchasing Japanese Government Bonds in order to bring the value of the Yen down, as well as running the market verbally from time to time.
Looking forward, we think that every pullback will more than likely find support, and as a result short term charts could be used in order to try and enter the market for the upside move. Ultimately, we believe that this market could go as high as 110, but given enough time a lot can happen. We think that ultimately this market is a long-term buy, and given long enough time we think that this could be the beginning of a long-term uptrend in this market they could be very rewarding for traders who are patient enough to take advantage of the new trend that seems to be forming.
Written by FX Empire