The USD/JPY pair initially tried to rally during the session on Thursday, but turned back around and fell to the 119.50 region. I don’t think of this as anything significant though, because the US dollar itself is favored over the Japanese yen. However, I do recognize that we could possibly be trying to form a massive descending triangle, but really I think that is the least likely of scenarios. I believe that once we break above the 120 level, the market then goes to the 122 handle, but won’t necessarily be able to do it quickly. I think this pair will continue to be somewhat choppy regardless, but most people are probably looking to this as more or less as an investment, and not so much a trade.
I believe that the Japanese yen will continue to lose value against most currencies around the world, with perhaps the exception of commodity currencies. After all, the Japanese bond market is pretty much a waste of time at this point, and that should continue to keep money out of Japan. Also, you have the added bonus of potential global growth, and if we get that it naturally favor selling the Yen anyway.
Buying pullbacks, like this one
I continue to buy pullbacks in this pair, just like the one we’re currently seen. I think that if you have a long-term investment horizon, this could be a decent pair to be involved in. However, I would enter the market in small increments as you could certainly get hurt with the volatility. Remember, whenever something scary happens in the marketplace, people tend to buy the Yen. It’s a bit of a safety currency, and probably one of the few currencies that is actually considered to be “safer” than the US dollar.
Once we get above the 122 level, I think that we will enter a new phase a buy-and-hold trading. The question will then be how long will it take to get there?
