The US dollar rallied against the Japanese yen during the trading session on Friday, as the finalists for the Federal Reserve Chairman all seem to be hawkish. Because of that, it’s likely that the market will continue to favor the US dollar, perhaps adding opportunities going forward as we dip. I think that eventually we will go looking towards the 114.50 level above, which is the beginning of significant resistance on longer-term charts. We have been consolidating for some time, and if we can break above the 115 handle, the market should continue to go much higher. At that point, I anticipate that the market should then go to the 118 level over the next several weeks if not months.
Even if we pull back from here, I have no interest in shorting this market, because I see so much in the way of support. I recognize that the 113 level will be supportive, just as the 112 level will be. Stock markets going higher will of course continue to influence this market to the upside, and therefore I have no interest in shorting this pair, the least not until we would breakdown to the 111 level or below. At that point, I think things would turn around and look very destructive, but right now every time we rally I think that people will be looking to add to the position and increase profits. Ultimately, this market should continue to find plenty of volatility and buyers, so I think that we will eventually rally, but it is going to be very noisy, so scaling into a position in small increments will probably be the best way to deal with this currency pair. Ultimately, this is a market that should continue to be noisy though, keep that in mind.
Written by FX Empire