The USD/JPY pair spent a lot of the session on Wednesday falling, but also found enough support at the 102 level in order to form a hammer for the day. Because of this, I think this pair is going to continue to at least tread water in this general vicinity, and therefore I cannot sell it at the moment. On top of that, I believe that the interest rate differential in the ten year notes will continue to expand, favoring the United States.
The pair looks as if it is trying to build a bit of a base, and the market should go higher eventually as a result. I think this pair could find resistance at the 103.50 level, but ultimately will head to the 105 level as it is a much larger big figure, which is almost always a target for larger money.
The 100 level looks as if it is going to be the “floor” in this market going forward as well, so I am interested in buying supportive candles is we pull back as well. The area is about as big of a number as you can get in the forex markets, so I wouldn’t be surprised to see a lot of buying in that area, even if we have sliced through it in the past. As long as 100 holds, I think we are essentially bottoming in this pair.
The market goes higher, but in an easy fashion.
The market should continue to go higher in my estimation, but I think choppiness will continue as the markets continue to struggle with knowing what direction to move in. After all, there is a lot of confusion out there, as the Federal Reserve continues to taper off of quantitative easing, but in a jobless kind of recovery. Nonetheless, I think the Fed is going to continue, so in the long run this pair goes higher. I am short of the Yen against many other currencies as well, and will continue to be for the foreseeable future. A move above the 102.75 level has this market looking for 103.50 in the short-term.
