The USD/JPY pair initially rally during the day on Wednesday, reaching towards the 111 level. However, we offered enough resistance to turn around and fall significantly. As I look at this chart, there seems to be a significant amount of support down to the 110-level underneath. This is a market that has been sold off rather drastically, so there could be a bit of an upward surprise waiting to happen. The Thursday session could be relatively quiet though, because quite frankly the jobs number coming out on Friday is going to be very important. I think that the 110 level in the short term should offer a bit of a floor, and as long as we can stay above there I do tend to favor the upside. If we break down below the 110 level, the market probably goes looking towards the 109 level, which is even more significantly supportive.
I believe that we could be looking at accumulation, and if we break above the 111 level, that would be confirmed in my eyes. At that point, the market should probably go looking towards the 112.50 level above which is significant on longer-term charts. If the market does breakdown, I believe that there is even a longer-term buying opportunity at the 109 handle. They move below that level should send this market much lower. The jobs number will have a massive amount of influence on the market going forward, as this pair tends to be very sensitive to the jobs number in America. If the jobs announcement is stronger than anticipated, then perhaps people will start to focus on the Federal Reserve, and the possibility of interest rates going higher later in the year. There are still a lot of questions when it comes to this, so this jobs number will be vital.
Written by FX Empire