USD/JPY Forecast November 2, 2012, Technical Analysis

The USD/JPY pair rose during the session on Thursday as the “risk on” attitude took over the global financial markets. The real test will be later today however, as the nonfarm payroll number tends to move this pair especially hard. The volatility will certainly pick up, and as such we will be very and stood to watch this pair and how the interpretation on the jobs number plays out later today.

There is one caveat however, as the US presidential elections are on Tuesday. Because of this, this could throw a bit of a monkey wrench into the normal analysis of this currency pair, and as such we could see a muted reaction. Quite frankly, we do not know what to expect until it comes.

Typically, this pair will rise if the jobs number comes out fairly strong in the United States. However, it may rise under either circumstance. After all, a week jobs number will be seen as benefiting Gov. Romney, and this could be interpreted as a potential election for him to be President. If that’s the case, more than likely the US dollar should appreciate in value as he has already stated that he wants to replace the Federal Reserve Chairman Ben Bernanke if he is elected.

If you were to be elected and follow through on this promise, this would put in and to the easy money policy seen out of United States. That being the case, it would take out one of the main reasons for this pair falling. Currently, we have the Bank of Japan and the Federal Reserve competing as they both try to weaken their currencies. If the Federal Reserve suddenly goes neutral, this has the effect of making the Bank of Japan the only competitor in this contest. Naturally, the Yen would depreciate against the US dollar.

If this is the case, we need to see the 80.50 taken out to the upside in order to clear the way for the 84 handle being targeted. If that level gives way to the buyers, we could see a significant move for a long-term buy-and-hold type of trade. Alternately, if we managed to break the lows of the Wednesday candle, we think we would head back down to the 78 handle.


USD/JPY Forecast November 2, 2012, Technical Analysis

Written by FX Empire