The USD/JPY pair went back and forth during the day on Thursday, and then shot straight through the air as the “risk on” move started in the currency markets. Looking at this chart, it’s easy to see that perhaps the markets will continue to go back and forth and it’s likely that the Japanese Yen will be how people express a change in overall risk appetite. Pay attention to the Japanese Yen pears overall, as they do tend to move in the same direction. The market seems to be focused around the 111 level, which had previously been resistance pair that being the case, the market looks as if it has broken out and because of this I feel that the market will eventually go looking towards the 112 level above, and the 112.50 level above there.
I believe that buying pullbacks will continue to be the way going forward, with the 110 level essentially being the 110 level, which has been important more than once. I believe that the market will continue to offer value, but we have gotten a little bit extended during the day so pullbacks may be necessary. Pullbacks will give us an opportunity to pick up momentum, which of course is a value play just waiting to happen. I believe that the pair has sold off drastically as of late, but perhaps been influenced by what people thought was going to come out of the Federal Reserve, which of course wasn’t what happened, and therefore it looks as if the Fed is going to be more hawkish than we originally anticipated, so it makes sense that the US dollar will strengthen in general, and that is directly expressed against the Japanese yen most of the time as this is one of the most sensitive pairs to interest rates.
Written by FX Empire