Wednesday’s trading session saw a little increase in the US dollar while the Japanese yen continued to weaken. I believe that we will attempt to test the highs once again at this point, and any sporadic little decline should present a favourable chance to purchase in a market where the interest rate differential is still pushing prices higher. Ultimately, the Bank of Japan is not taking any action to bolster its currency, and the interest rates emanating from that nation are pitiful in comparison to the United States, where rates are still rising.
As one of the most indebted countries in the world, Japan actually has a serious issue at the moment since they must find a way to fund such a large debt load, which means they must maintain lower interest rates. As a result, currency dealers are now shorting the Japanese yen, giving them the option of either seeing their currency plummet or going bankrupt. Other than those two possibilities, they don’t really have much of an option. Put another way, I believe that over time, the value of the Japanese yen might decline significantly.
The Bank of Japan is likely looking for a gradual, rather than a sharp, decline in the value of the yen at this stage. They periodically manage to bring the market back down, but in all honesty, everyone is aware that they are powerless to act—at least not without seriously harming domestic economic conditions.
The Federal Reserve is supposedly going to loosen monetary policy; they may pause, but that still creates an almost 5% differential between these 2 currencies, which will keep the trend intact moving forward. As a result, I don’t see how you can do anything to counteract this. At this point, the markets are still playing games with the idea of what central banks will or won’t do. The markets are free to search for the 155 you level when we break over the ¥152 level.