The USD/JPY pair as you can see broke out during the course of the day on Wednesday, slamming right through the 103 level, an area that had been so resistive. Now that we are broken above there, I feel that the market will continue to go much higher, but it will have a couple of areas in which it has to deal with between now and its ultimate destination. I think that the 104 level will be somewhat resistive, and the 105 level even more so. With that, I think that the markets will try to get there, and then pullback from each resistance area for short-term opportunities to pick up value.
Once we get above the 105 level, I think we will head to the 110 level, given enough time. This is a long-term target of course, and there will continue to be pullbacks from time to time as this market could end up being a “buy on the dips” type of situation as it traditionally has been from time to time.
Federal Reserve minutes.
The Federal Reserve released its minutes from the last meeting during the session on Wednesday, and it does in fact suggests that perhaps the Federal Reserve is closer to raising interest rates than originally thought. The Bank of Japan is still in its very easy monetary policy for the foreseeable future, so it makes sense that this pair would go higher. The Bank of Japan certainly has no interest in this pair going back down, so quite frankly it wouldn’t surprise me at all if they come out with some type of language in a statement or press release soon that accommodates this move.
All things being equal I believe that the 103 levels now going to be the “floor” in this marketplace. I think we go back there, there will be a massive amount of buying pressure and the market should simply explode to the upside again. The fact that we close so high in the daily range from Wednesday tells me that there is still plenty of pressure below.