USD/JPY Forecast October 16, 2017, Technical Analysis

USD/JPY daily chart, October 16, 2017

The US dollar drifted lower during the course of the session on Friday, reaching down to the 112 level, but then bounced above there only to turn around to show signs of massive resistance. The extraordinarily long red candle suggesting that perhaps we could break down a bit. The less than stellar CPI numbers of course works against the value the US dollar, and that being the case, it’s likely that we will still be data dependent. If we can continue to make a fresh, new low, the market should then go down to the 111-level underneath. That’s an area that would be massively supportive, and I think that given enough time the buyers will come back in. That being said, I believe that if we can break above the 112.50 level above should be a very good sign, and I think that we would be buyers then. Ultimately, moving this market towards the 114.50 level above is what I expect to see next.

I like buying dips, the offer value in a market that has a long history of volatility, and I believe we are currently in the middle of trying to turn around the overall trend. That is normally a very noisy affair, and that continues to cause the markets to be very difficult to navigate. Nonetheless, I do like buying this pair, as the interest rate situation United States seems to favor strength over the Japanese yen, as the Bank of Japan is light years away from being able to raise interest rates or tighten quantitative monetary policy. I think that the US dollar should continue to find plenty of reason to go higher, especially against the Japanese yen when it comes to the interest rate differential. Selling is all but impossible.

Written by FX Empire