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USD/JPY Daily Outlook - July 10, 2013

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The USD/JPY pair had a slightly positive session on Tuesday, but quite frankly it was pretty uneventful all things considered. The 101 handle appears to be offering a bit of support, but I would not be surprised to see a continuation of the pullback to the 100 level to look for serious support.

The 100 level should offer enough support in order to bring quite a bit of buying back into the game, and I do think that this market will continue higher overall. This area will more than likely offer enough support that many of the traders out there will feel the need to get involved again, and at that point time I think we will try to make an attempt to the 103 handle.

The Bank of Japan still works against the value the Yen, and it is become more and more obvious that the Federal Reserve is probably going to have to taper off of quantitative easing sometime soon. In fact, most market participants now believe that September could be when we start to see this happen, and of course the markets are trying to price it now. The Japanese central bank of course continues to buy bonds and mass amount, so it makes sense that the interest rate differential is starting to favor the US heavily, and of course more money flows into the US because of this.

USD/JPY Chart July 10

One-way trade

For some time now, this is been a one-way trade as far as I'm concerned. After all, I'm not going to fight the Japanese central bank, and it appears now that the Federal Reserve has somewhat given up on the whole idea of quantitative easing. If that's the case, there's simply no fight as far as I'm concerned that I will be part of. I will be buying on dips in this market going forward, and I fully believe to see this market hit 105, possibly even 110 by the end of the year. This is a multi-year trend waiting to happen, and I plan to take full advantage over time and time again.

Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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