USD/JPY Forecast for the week of December 3, 2012, Technical Analysis

The USD/JPY pair fell during most of the week over the last five sessions, but bounced in order to form a healthy looking hammer. This is been a strong pair recently, and it looks like we have farther to go. In fact, we think the 84 level is almost a given at this point.

If we managed to get above 84, we could see a real run away trade at that point. The Bank of Japan looks set to expand its monetary policy to astronomical terms, and as a result the Yen should continue to weaken over the long term. Granted, we do have the Federal Reserve on the other side of this equation and they look ready to perhaps ease as well, but nowhere near the kind of massive inflation that the Bank of Japan is trying to conjure up by printing currency. With that being said, we think that buying is the only route to go in this pair, and a break of the highs of this week we will be adding to an already substantially sizable long position.