The US dollar plunged against the Japanese yen, with no real news other than the Bank of Japan clearly intervened.
That being said, this presents a buying opportunity. The 200-day EMA has held as support. We plunged all the way back down to the 158 yen level.
I'm perfectly comfortable adding to this position.
This will be about the 3rd or 4th time they've intervened. Really all they can do is slowly try to put the brakes on the destruction of the yen.
Unfortunately for the Bank of Japan, they will have very limited ways to get this trend to change. Really the only way they could do it is if they hiked rates aggressively, but that would destroy the Japanese economy. So, this is a sign of desperation I'm more than willing to take advantage of. Keep your leverage reasonable, and it's something that you can do.
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Interest Rate Differentials and Bullish Trend Persistence
I have taken a hit today, but most of my positions go back months, and they're not huge. Cumulatively they are big, but in general, this is a market that I believe continues to go higher. I think the USD/JPY pair hits the highs again. We've already played this movie a couple of times in the past. It will be a grind to the upside. It won't necessarily be easy; this does tend to spook traders, it has a certain effect, but the trend will not change just based on one action from the Bank of Japan.
The interest rate differential alone continues to get you paid, and it's interesting because we've seen rates in America all over the place, but they are so much higher than Japan that the break-even point is much wider than it is with other currencies. I like this pair, I still buy it, this offers value that I can take advantage of.
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