Over the course of Friday’s trading day, the US dollar has strengthened considerably as we continue to pose a danger to the ¥150 level. This has clearly been a bit of a brick wall and has been significant on several occasions. The market is expected to open up and move to the ¥152 level if we can break above it. In the meanwhile, you may even get compensated because of swap. Put otherwise, there isn’t much of a motive to short this market because a breakout is most likely just a matter of time away. Remember that the Bank of Japan continues to engage in quantitative easing; it just entered the bond market directly to purchase bonds while lowering interest rates.
The Federal Reserve, on the other hand, is in charge of monetary policy, which is obviously still tight and unlikely to loosen anytime soon. Even while the majority of traders do not anticipate a rate hike at the next meeting, the Federal Reserve very well may raise rates once more before year’s end. In any case, the US dollar is far more appealing than the Japanese yen since they will probably maintain interest rates low for a while.
There are still plenty of buyers for short-term pullbacks, and the current “floor in the market” is at ¥147.80. Not only does the 50-Day EMA race towards that region, but it also provides a great deal of assistance. Because short-term pullbacks have value, traders will continue to see them as an opening. Even if the Bank of Japan is still putting pressure on the market, as things stand right now, it’s nearly hard to go short in this market.
Recent central bank intervention has occurred, but it has occurred in both directions, indicating that the Japanese have a great deal of options. In light of this, I do believe that we will ultimately break out, and when we do, there will be a significant upswing.