The US dollar rallied a bit against the Japanese yen at the open on Thursday but continues to find plenty of resistance above at the 110 handle. This is a market that will be highly sensitive to risk appetite around the world, and one of my favorite barometers for measuring that when it comes to the USD/JPY pair is the S&P 500. The S&P 500 did look a little suspicious at the close during the Wednesday session, so I suspect that we could get a bit of a roll over here. However, I would also anticipate that the 180.50 level should hold again. I don’t expect some type of melt down, but it’s clear that there is a lot of volatility out there, and that can cause a lot of fear. I think a lot of people have been burned in the last few sessions, so therefore they may be a bit hesitant to take on exorbitant risk.
If we can break above the 110 handle, then I think the market is free to go much higher, probably stopping at the 111 level, followed by the 112 level, both of which have been very important recently. This market remains very choppy, but that’s nothing new to anybody who’s traded the Japanese yen. Ultimately, I believe that the market will find buyers, but we may have to pull back to offer enough value to entice them first. With that in mind, short-term traders are probably going to be selling, but for myself I will be waiting for value below. I believe in the longer-term uptrend, but it is going to take some confidence building.
Written by FX Empire