That being said, underneath we have the ¥180 level as major support, it does look like we are at least trying to grind our way higher. If the rest of the yen related pairs continue to rise, it will drag this pair higher, but the softness of the British pound is a bit of an impediment. That being said, I’m not interested in shorting this pair, I just think that it will underperform some of the other pairs that you could be involved in shorting the Japanese yen. If we were to break down below the ¥180 level, then the market could drop to the ¥177.50 level.
If we can break above the ¥185 level, this is a market that could really start to take off, but we need a little bit of help coming out of the GBP itself. Ultimately, this pair is also risk sensitive, so if risk appetite continues to stagnate, that might work against that as well. Nonetheless, the Bank of Japan is stuck with loose monetary policy going forward, therefore I think we’ve got a situation where the interest rate differential will continue to favor almost anything against the Japanese yen, but we also have to worry about the potential of the British economy suffering at the hands of European recession. In other words, this is going to be a positive market, but it’s probably going to be like swimming through mud at this point.
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