- The US dollar has been rather quiet during the course of the trading session on Monday, and that makes a certain amount of sense considering that it was Memorial Day in the United States.
- So obviously that is an issue as far as liquidity is concerned.
- I do think this is a scenario where you have to look at this through the prism of what the trend is.
The trend is very obviously to the upside. So with this being the case, it's likely that any dip that we get will end up being a buying opportunity. Therefore, I think you have to look at it as value. The US dollar of course gives a much higher interest payment at the end of the day than the Japanese yen does. So again, it ends up being a carry trade, really. Nothing more, nothing less.
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USD/JPY is a market that, given enough time, does go looking to the 160 yen level. It doesn't mean that it has to be overnight, but I do think that sooner or later that's what happens. Short-term pullbacks will see support near the 155 yen level with the 50 day EMA underneath offering quite a bit of support.
In general, this is a market that I think continues to see a little bit of volatility because of the Bank of Japan intervention several weeks ago. But ultimately, it looks very much like a market that is going to ignore that in the longer term. And although intervention can slow down the trend, it very rarely changes it you know, long gone are the days where we would see intervention completely throw things around. So, I say if it pulls back to 155, I would start to pile back into this pair. If we can break 160, that would be a huge sign that the next leg higher has started.
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