The USD/JPY pair broke higher during the Friday session, as we clear the 110 level. Not only did we clear that level, but we also broke above the 110.50 level, where we should start to see some buying pressure. After all, that was an area that was resistant, and it should now be support. I believe that the market will probably go looking for the 112 level after this, and that there should be plenty of support all the way down to the 110 handle. The market has been very resilient, and now I believe that the selling pressure is all but done. Interest rate hikes coming from the Federal Reserve will continue to offer a reason to go long. That’s not to say that things will be volatile, but this pair tends to follow US stock indices as well as interest rate differentials between the US and Japan, both of which are favorable for the pair to appreciate and value.
Another way to put it, this pair tends to be very sensitive to risk, but I think we will continue to see bullish pressure over the longer term as things are lining up for higher pricing. The 112 level above will be resistive, just as the 111 level will. However, the bounce has been rather significant, and I do think that there is a significant amount of strength underlying this type of movement to support the buyers. I have no interest in selling, least not until we break below the 110 level again, something that doesn’t look likely after today’s action. Buying on the dips could be a way to pick up value in what should be a grind higher. Building a position over time might be the best way to go.
Written by FX Empire