Greenback Continues to Pick on Yen

All things being equal, I do think that pullbacks we bought into, and I think that it is probably only a matter of time before we truly take off to the upside. 

• The USD/JPY has initially tried to rally but has also seen a little bit of a pullback as we wait for the Jackson Hole Symposium speeches. That being said, it is still very much an uptrend and it’s difficult to bet against it.
• Because of this, I think you have a situation where you must pay close attention to the overall attitude of the markets and recognize that we are still in the consolidation area of what could be thought of as a bullish flag. With that in mind, I’m a bit cautious to get short anytime soon and I think that more likely than not, pullbacks are going to end up being buying opportunities before it is all said and done.
• After all, the Federal Reserve remains very tight with its monetary policy, and of course, the Bank of Japan is doing everything it can to keep interest rates low, which is a killer of currency.

All things being equal, I do think that pullbacks we bought into, and I think that it is probably only a matter of time before we truly take off to the upside. Once we do, then we are going to threaten the ¥147.50 level, and then possibly the ¥150 level. In fact, it would not surprise me at all to see the US dollar go much higher against the Japanese yen.

If we were to break down below the ¥144 level, then I think you might have a little bit of a deeper correction on your hands, but it’s not necessarily something I’m looking for at the moment. With this, I anticipate that we will see a lot of noisy behavior, but ultimately even if we were to break down below there, I think the “floor in the market” is probably closer to the ¥142.50 level, an area that also features not only historical support and resistance, but the 50-Day EMA in that same general vicinity. With this, I will be looking for opportunities to pick up “cheap US dollars” along the way. I have no interest in selling whatsoever.

At this point though, it looks like we are going higher over the long term, and the Friday action was the start of the next leg. I am a holder and will continue to be.

Potential signal: Buying USD/JPY on the late-day dip is what I am doing. I have a stop at 144, with a target of 149.74, longer-term.

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