- Taking a look at how the US dollar against the Japanese yen and my daily US dollar Japanese analysis I noticed when frankly, that, this is a market that looks like it's trying to fall apart, but quite frankly, I'm not impressed and the reason I say that is that the interest rate differential is still massive and I think a lot of people don't really understand how big of a deal that could or should be.
While traders continue to focus on the CPI being lighter than anticipated, the reality is that the Federal Reserve, even if it were to cut interest rates twice like people are trying to price it and now still offers a massive amount of swap when it comes to the US dollar against the Japanese yen, the Bank of Japan has absolutely no possible, way of being able to try and raise rates.
I’d Be a Buyer
So quite frankly, this looks like a buying opportunity to me. That doesn't mean that it's going to be easy. I didn’t expect that at all. But the reality is that you will get paid to hang on to this pair and I think that is going to continue to be the thing that most people pay attention to. In fact, when I look at the four hour chart, we're already starting to try to form a bit of a hammer.
So, it'll be interesting to see how this plays out. But I think the traders are looking at this as an entry point, because, quite frankly, the ¥158 level had previously been so resistive so it does make a certain amount of sense that there would be market memory in this region. I'd be careful, but I am intrigued.
It is worth noting that the Bank of Japan has admitted to intervening during the session, so this makes buying this pair something that I will be paying attention to and looking to do anytime soon. The USD/JPY forecast has been very bullish for some time, and I think this will continue to be a “buy on the dips” scenario going forward.
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