The US dollar has been back and forth against the Japanese yen so far during the trading session on Wednesday, showing signs of life near the ¥110 level, and on the hourly chart it looks as if we are trying to roll over again. However, on the daily chart we have come very close to forming the “golden cross”, which is the 50 day simple moving average crossing over the 200 day simple moving average. By doing so, that is a longer-term “buy-and-hold” signal. While I don’t necessarily think that is the easiest trade to take right now, I do believe that once local markets get used to the idea of tariffs being a negotiating tactic by the Americans, that will come to understand that eventually there will be a consensus and an agreement between the Americans and the Chinese. If that’s the case, these market should go much higher.
Fundamentally speaking, the United States offers much more in the way of interest rates than Japan does, and that will remain the case for the foreseeable future. It is because of this that I believe that the pair will continue to go higher over the longer-term. That doesn’t mean that we will get the occasional pullback, but these sudden knee-jerk reactions should be thought of as gifts for buyers. Jumping in slowly and adding as the trade works out in your favor is more than likely going to be the way to play this pair going forward.