- The dollar has recovered after initially falling down a bit against the Japanese yen during trading on Thursday as we continue to see the buy on the dip mentality come into the picture.
- Ultimately, I think this is a market that if we can get above the 155 yen level, then we can truly take off to the upside.
- At that point in time, I would expect to see a lot of momentum in the market.
Breaking above 155 yen would probably bring in the next leg of FOMO trading, and it would make a lot of sense considering that the Bank of Japan is nowhere near being able to cut interest rates. With that being the case, it does make a lot of sense that the Federal Reserve, which is more likely than not going to have to wait to cut rates, continues to push the dollar higher inadvertently. After all, the Federal Reserve has shown itself to be feckless when it comes to doing its job, while I think at this point in time the markets are finally starting to accept the fact that this is a situation that central banks simply cannot do much to influence the market other than to keep rates higher.
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Remember the Swap
You get paid to hang on to this trade and the swap of course is something that greatly influences how the USD/JPY market trades. So don't forget that. A move above 155 perhaps opens up a move to 157.50 over the longer term. We will just have to wait and see whether or not that actually plays out. But right now, this looks very much like a market that I think you buy each and every dip on with the 152 yen level underneath being a massive support level, which is especially true now that the 50-day EMA is racing towards that area as well. Getting paid at the end of every day is something that a lot of institutional traders like and that's why there's so much upward momentum.
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