The US dollar continues to be very choppy on Wednesday, as we are looking for more momentum heading into the jobs report.
USD/JPY
The US dollar continues to be very choppy and noisy against the Japanese yen, and that has played out to a tee here on Wednesday. That being said, the market ends up the day fairly neutral, but short-term pullbacks, I think, continue to get bought into. Keep in mind that the 162 yen level is an area that's been important multiple times in the past, and we did break out of an ascending triangle that got violated to the upside.
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Over the longer term, I think the markets are going to continue to look at the interest rate differential as the main play here, and given it enough time, I think you have to accept the fact that maybe this is a market that has much further to go. In fact, when you look at the longer-term charts, you can make an argument for a rounding bottom that measures toward a move all the way to the 224 yen level.
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I have no interest in shorting this USD/JPY pair, and quite frankly, if the Bank of Japan intervenes again, I don't care. I will just add to the position once we bounce again, or at least stabilize. The interest rate differential not only favors the US dollar, but so does the economic picture. The Bank of Japan is essentially stuck and the only thing it can do at this point is probably stuck with having to worry about the massive debt in Japan. The United States, of course, has the massive advantage of having the world's reserve currency.
The 50-day EMA sits right around the 160-yen level. That, for me at least, unless we get some type of intervention, is the absolute floor in the market. Every time this market dips I don't hesitate to add to it. I have added 3 times over the last couple of months and continue to hold.
I really don't have a target at the moment. I get paid at the end of every day, but the measured move at least, like I said, was 224 yen. To be honest with you, we typically overshoot those moves, so we'll see. That, of course, is something that will take years to get to, but I buy dips as and when they occur.
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