USD/JPY Forecast February 7, 2013, Technical Analysis

The USD/JPY pair initially rose during the session on Wednesday, but ran into resistance near the 94 handle and pullback in order to form a shooting star. This shooting star could signal the beginning of a larger pullback, and this would be perfectly all right with us. After all, this is obviously a “buy on the dips” type of currency pair right now, and as a result we will look at any fall in this pair as a potential buying opportunity.

We believe as long as we are above the 90 handle that the only thing you can do in this market is buy the Dollar, and sell the Yen. Looking at this chart, it does look like we could get little bit of a pullback, but it should be relatively shallow in nature. You have to keep in mind, that the entire market knows that the Bank of Japan is trying to push his pair higher. Because of this, there will be a bit of trepidation as far as trying to sell this market, and any moves in that direction should be shallow in general.

We still believe that the 95 handle is the target for the market going forward, but it would make sense to see a bit of choppiness between here and there. After all, we are bit overextended, and it wasn’t that long ago that we found ourselves seven or 800 pips lower. Going forward, we do believe that we will not only reach 95, but we also think that we will eventually break over it. For our money, we are expecting a print of 100 between now and the end of 2013.

This isn’t to say that this move will be sudden, or even steady. Since the Bank of Japan has fired the first serious shots in what we believe will be the upcoming “currency war”, we believe that there will be retaliation by other central banks, namely the Federal Reserve and the European Central Bank, and as a result there will be sudden knee-jerk reactions in both directions. Volatility will be here to stay, but we believe in the end that this pair will continue to go higher.


USD/JPY Forecast February 7, 2013, Technical Analysis

Written by FX Empire