The USD/JPY pair initially fell during the course of the session on Tuesday, but found enough support just below the current level to turn things back around and form a hammer. The 124 level is slightly supportive, but having said that I recognize that the market should continue to go much higher. The 125 level above should be resistance, but if we can get above there I feel that it’s only a matter of time before we go much higher.
Ultimately, I think the pullbacks will continue to offer value as we try to build up enough momentum to continue going higher given enough time. Ultimately, I think that the pair probably goes to the 130 level and we would be talking several months by the time we get there. I don’t have any interest in selling, there’s far too much in the way of support at not only the 124 level, but also the 123 level, and the uptrend line that I see below there. In fact, I have no interest whatsoever in selling this pair until we get well below the 120 handle.
FOMC
Don’t forget, today has the release of the FOMC Meeting Minutes. With that, it’s very likely that we will see quite a bit of volatility during the session today, as this could give us a hint as to when the next interest-rate hike is coming, and how many of them for that matter. The Bank of Japan continues to work against the value of the Japanese yen, and are years away from it raising interest rates while the Federal Reserve is most certainly going to do so later this year. With this, I believe that this pair continues to go higher based upon interest-rate expectations, and ultimately this will be a multi-year move. I have no interest in selling this market, because quite frankly the fundamentals and the technical analysis are both telling me that it’s going to go higher.
