- The US dollar has broken to a fresh, new high against the Japanese yen during trading on Thursday, as the uptrend looks to be continuing.
- We just completed a “W pattern”, which could send this market looking to much higher levels.
- The measured move is for the ¥140 level to be targeted, so we will have to wait and see whether or not that actually occurs.
Strong USD/JPY Uptrend
Regardless, the USD/JPY currency pair has been in an uptrend for some time, so there’s no real point in trying to fight it. The trend is very strong, and I think it will continue to be so as we have seen so much in the way of momentum. The market might have a big fight ahead of it in this general vicinity, but I just don’t see anything that will keep this market from rising over the longer term. This will be especially true if the interest rate differential between the United States and Japan continues to widen, I think given enough time, we probably have a scenario where the markets are going to eventually break out.
Keep in mind that the Federal Reserve has to do something about inflation, and therefore interest rates will have to continue to climb. However, the market is currently fighting the Fed, and it’s also worth noting that the Jackson Hole Symposium is happening next week, so it does make quite a bit of sense that the central bankers around the world will continue to try to talk the markets down because quite frankly they are working against what the central banks are trying to accomplish. Because of this, I would anticipate that interest-rate markets will probably be all over the place next week.
With this being the case, keep in mind that it is going to be noisy and perhaps even dangerous overall, therefore you need to be cautious about your position size. However, we have clearly made a statement on Thursday that the US dollar is going to continue to work against the yen. If we do turn around and break down below the ¥132 level, then it’s possible that we could go down to the ¥127 level. That is where we currently see the 200 Day EMA, so it makes for a nice target and a potential floor.
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