- The US dollar initially plunged against the Japanese yen during trading on Friday, but it does seem to be holding its own.
- At this point, the 150 yen level is a little bit of support, and it looks like we're trying to form a bit of a hammer.
- With what we've seen recently, this breakout and then pullback, I think, sends up a nice little buying opportunity. And given enough time, I think we could go as high as 162 yen.
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Obviously, that's a longer-term call, but for me, that is a longer-term buy-and-hold setup just waiting to happen. You get paid to hang on to the trade between now and then, which always helps. That means you can pad your trade a little bit. Also, keep in mind that the 50-day EMA is racing to reach the 149 yen level, which is right around where we bounced from earlier in the session.
The Japanese yen has a host of issues working against it, not the least of which will be the fact that the Bank of Japan cannot tighten rates much, if at all. With the debt load in Japan, they probably have reached about as tight as they can get. If that is in fact going to be the case, and of course, the reaction to the recent election is the correct one, where Japan should become a loose monetary state anyway, then this is a pair that should continue to take off to the upside.
The US dollar has been very stubborn against multiple currencies around the world, so the Japanese yen won't be any different. This is a pair that I have been buying since somewhere around 143 yen. It's been a little bit of a rocky road on the way up, but I've been getting paid every day to hang on to it. Therefore, it allows me to stick with the trade longer. I think we have the next leg up just waiting to happen here. That being said, I remain bullish.
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