The USD/JPY pair went back and forth during the session on Monday, as traders came back from the holiday weekend. However, much of Europe was still away from its desk, and as a result the liquidity would have been a bit thin. With that being the case, there is in too much you can read into this market at the moment, except that we could possibly be rolling over at this point. With that being the case, we are looking to short this market from a short-term perspective, but ultimately believe that the market goes higher. It really comes down of what your trading style is, but we feel that this is essentially a “to speed” market.
The pullback coming at this point in time will be very significant, but should provide value for those of you that are out there trading longer term. That’s essentially what we do, but we are looking for a very short-term selling opportunity, probably something of lasting a few hours. We have no interest in hanging onto a short position for any longer than we have to, and quite frankly will have to rethink that when the time comes.
However, we think that value can be found at lower levels, thereby offering buying opportunities going forward as the market should head towards the 103 level first, and then the 104 level, followed by the 105 level given enough time. Ultimately we believe that the market will break above the 105 level, but this is going to be something that is more of a process and less of a move. We think that this is going to be a longer-term buy-and-hold type of scenario, and as a result we are short of the Japanese yen against several other currencies the pay positive swap. Since this pair typically doesn’t with most brokers, we believe that we need to see interest rates rise in the United States in order or this pair to really take off to the upside, so any bullishness that we see in this chart is going to be more of the longer-term variety.