Traders continue to look to the higher-yielding US dollar over the Japanese yen, despite the slight pullback in the early part of the Tuesday session.USD/JPY
The US dollar fell to kick off the trading session on Tuesday, as we have seen a lot of noise against the Japanese yen, and I think at this point, traders will continue to look at dips as potential buying opportunities. After all, the overall attitude of the market is likely to be one of value hunting. The 161 yen level is an area that has been supported, and then I think if we were to break down below there, the 160 yen level could also be support. The 50-day EMA is ready to act as a potential support barrier as well.
Top Regulated Brokers
We know that the United States dollar is strong, and we've also seen the Bank of Japan get involved in this pair in order to protect the yen, but at the end of the day, the economic reality coming out of Japan is that things are probably seeing a little bit of inflation, but maybe not enough to overcome the reality of what the United States faces.
Central Bank Divergence and Long-Term Value Hunting
The Federal Reserve could very well raise rates later this year, while the Bank of Japan may be a bit stuck because of the massive debt load. There is no good solution for the Japanese, so the only thing they can do, at least at this point, I believe, is to protect the yen from collapsing.
I do believe we go higher for quite some time, but that doesn't mean we get there overnight. This is a longer-term investment for me, and I use this as a buy-and-hold type of market. Having said that, I don't buy huge positions all at one shot. I just hang on to the market and take advantage of the swap, and if it does pull back, I add slightly to it. That's how I've traded this market for several months now, and I think at this point we continue to see more of the same.
Want to trade our USD/JPY forex analysis and predictions? Here's a list of forex brokers in Japan to check out.