- The US dollar is steadily rising against the yen, bolstered by strong buying activity pushing it past a major support level.
- A potential pullback is viewed as an opportunity to buy, as more gains are anticipated due to differences in interest rates and Japan’s accommodating monetary policy.
The US dollar experienced some initial decline against the Japanese yen, but strong buying pressure reversed that trend during trading hours. We’ve maintained a position well above the critical 155 yen mark multiple times, currently sitting about 60 pips above it. I think there’s room for further upward movement, possibly eyeing the 158.50 yen level.
This market has been consistently trending upward for quite a while now, so any short-term dips could present buying chances. It seems Japan might adopt a very accommodating stance regarding future monetary policy, especially with the new administration. I believe that interest rate differentials will continue to play a crucial role in pushing the market higher. There’s a global shortage of US dollars, and while it’s uncertain how Japan will navigate this, it may not ultimately matter.
This market floor
All considerations suggest that the market has a lower boundary around the 153 yen level. The 50-day EMA is approaching that range. For the past few months, I’ve focused on this strategy, and it fits nicely within my portfolio, as I receive rewards for holding onto this pair at the end of each day. It proves to be a solid investment. In the long run, carry trades tend to be integral in the forex market.
Any exit point should be seen as a potential buying opportunity. There’s nothing in this chart that indicates we should consider shorting this pair. It’s a gentle, progressive climb. It’s persistent, and it’s exactly the kind of movement you want to see. It isn’t a buying frenzy; rather, it’s a steady bull market that continues to rise in a controlled manner. I believe this pair will surpass expectations.
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Christopher Lewis has over 20 years of experience in foreign exchange trading and has been a noted contributor to various financial platforms. He also writes for several publications and prefers a long-term trading strategy, with trades often extending over several days or weeks.
