The USD/JPY pair broke higher during the course of the session on Tuesday, breaking above the top of the shooting star from the Monday session. Because of this, I believe that the market is going to continue going higher, as the Bank of Japan has worked against the value of the Yen and of course the Federal Reserve looks much more likely to potentially raise interest rates in the fairly near term. With this, the market could reach towards the 105 level, but at this point in time I think that there will be quite a bit of choppiness. Ultimately though, I am a buyer and not a seller of the USD/JPY pair. I believe that the 100 level has offered a bit of a “floor” in this market, so at this point in time there’s no interest on my behalf of selling.
Given enough time, we could very well start an uptrend, especially if the Federal Reserve does in fact not only raise interest rates of September, but signal that it perhaps will continue to raise interest rates. After all, the Bank of Japan looks very likely to add quantitative easing, in order to kick start this move. If we break down below the 100 level, I feel fairly confident that the Bank of Japan will step in and either intervene in this market, or perhaps due even more quantitative easing. Regardless, it looks as if the Japanese have lost their sense of humor when it comes to a strengthening Japanese yen, and now the 100 level has become essentially the “line in the sand.” Because of this, I believe that buying is the only thing you can do, but you do have to recognize that you may have to do it several times as we bounce around in this general vicinity. I think that we may have seen the bottom in this market, or at least somewhere near this area as there is more than enough reason to think that the Bank of Japan will do whatever it takes to get this market going higher.