- The US dollar has rallied a bit against the Japanese yen in the early hours on Tuesday to break above the crucial 144 yen level before turning around and forming an exhaustion candlestick.
- The shooting star that we are trying to print at the moment certainly suggests that we could fall from here.
- I think that does make a certain amount of sense, considering just how bullish we have been over the last week or so.
Short-term pullbacks are more likely than I could see a bit of support, but we'll have to wait and see how things play out. After all, the Federal Reserve has cut interest rates by 50 basis points, but at the same time we've seen the Bank of Japan sit on the sidelines and do nothing, and that suggests to me that interest rates are going to stay extraordinarily low in Japan. I've been saying for a while that I didn't think the Bank of Japan could do much due to the fact that the debt level is so massively hindered by the idea that higher interest rates just are not sustainable.
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So, with that, I do think it's only a matter of time before the Japanese yen gets hammered. And we see other currencies rally against it. Now, whether or not that happens right now remains to be seen. But I certainly think that we are in the midst of trying to turn things around.
The Support Barrier Below
The 140 yen level underneath is going to continue to be a major support level and as long as we can stay above there. I'm still willing to take a shot at buying this pair occasionally, but I also recognize that it's got a lot of work to do. This might be something that takes weeks if not months to turn around, so therefore I don't put a lot of money into any one particular position, but I do keep it in the back of my mind. I get paid at the end of every day to hang on to a long trade.
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