The USD/JPY pair rose yet again during the session on Thursday is traders came back and attempted to push the market to the 105 level. That of course is a psychologically significant level, and is the target that we’ve been calling for the market to reach for some time now. Now that we getting close that area, we believe that the market will more than likely pull back just of that, but we are going to see continued bullishness in this market going forward. Quite frankly, we think the 104 level will be the “floor” of the market in the short-term, and could possibly bring in a lot more buying.
The biggest problem of course is the fact that we are at the end of the year, and there will be a certain amount of problems with liquidity. However, we believe that this market is without a doubt a “buy on the dips” type of market, and that of course could be the beginning of a longer-term uptrend. This is in fact what we believe, and expect this market to go much, much higher over the next several years.
With that being the case, there is simply no way to sell this market, and anytime it starts to fall we have to begin to wonder whether or not the US dollar has suddenly become “on sale” when it comes to comparisons against the Japanese yen. Ultimately, we could see this market going to the 125 level over the course of the next several years, which while it sounds like an extraordinarily high level that would simply be a recovery of the market from the financial crash a few years ago.
The Bank of Japan has just started to ease its monetary policy yet again, and the Federal Reserve is starting to look towards a tightening policy. Because of this, we think this market should continue to go higher time and time again, and many careers could be made trading just this one currency pair. On top of that, eventually the interest-rate differential will start to expand.
Written by FX Empire