Potential signal:
- I am a buyer with a stop loss at the 151 level and a target of 154.
The US dollar has initially pulled back slightly against the Japanese yen, only to turn around and show bullish pressure yet again. All things being equal, this is a market that I think is taking off to the upside and will eventually find a way to go higher. And ultimately, I think if we can break above the 153 yen level, we really start to take off.
The market recently reacted to a strong aversion to the idea that the Japanese election is signaling that we will get loose monetary policy coming out of Japan. We'll have to see if that actually happens, but either way, that's what the market believes. And also, if you look at the market, it was sniffing this out for a while.
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I Remain Bullish Overall
I've been bullish on the US dollar against the Japanese yen for quite some time. You get paid to hang onto this trade. So, I still like holding it. Ultimately, the hammer from the session on Friday, I think, was an excellent signal, just like the gap hire was. Remember when we were up here, we were talking about trying to find value. We found it. Now we're taking off. I think it will be noisy to get above 153 yen.
But eventually, if we do, then it opens up the idea of 156 yen. I just don't have any interest in shorting this market, and I think the US dollar continues to strengthen overall against most currencies, and the Japanese yen won't be any different in that scenario. You get paid to hang on to the trade. It's a positive swap situation. So that also comes into the picture to offer a lot of potential supportive action as well. At the end of the day, I think not only do we go higher and reach the 153 yen level, but I think we break out and go much, much higher given enough time.
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