The US dollar continues to strengthen overall on the longer-term charts, but the USD/JPY pair ended up pulling back during the length of the day, and headed down to the 120 level. The 120 level offered enough support to turn things back around and pushes market higher by the end of the day. We believe that this area should be a support area after the fact that it had proven to be resistive. It’s a nice large, round, psychologically significant number, and the USD/JPY pair is without a doubt one of the more technical pairs that we trade.
We are simply waiting for some type of supportive candle in order to start buying, but we could buy on shorter-term charts as well. We believe that ultimately this market should go much higher, probably heading to the 125 level given enough time. With that being the case, we believe that the market will pullback several times between here and there, and that will offer significant buying opportunities. On top of that, we think that there is enough support below the 120 level as well in order to continue pushing this pair higher. We have no interest whatsoever in selling this pair, as the US dollar is one of the strongest currencies around, so there’s no reason to go against it.
On top of that, the Bank of Japan continues to work against the value of the Yen overall, and therefore we feel that this pair only has one direction, and that’s higher. We think that this is a multi-year trend that is starting to show itself, and really at this point in time we have no scenario in which we feel comfortable selling this pair. In fact, we don’t even know the level that we would look for in order to do that. The 115 level below is massively supportive as well, and quite frankly we would be absolutely stunned if this market even made it down to that level. This market should be thought of as a measuring stick on the value of the Dollar. Essentially every time it falls, think of it as being “on sale.”