The USD/JPY pair fell initially during the day on Friday, as the jobs number missed the anticipated 217,000 jobs added during the month of August. However, there were underlying factors that suggested perhaps the employment situation was and as Dyer as initially thought, and with that of course we saw quite a bit of volatility in this pair. After all, the market looks as if there are buyers below. After all, we did up forming a hammer by the end of the day and that of course suggests that there is plenty of support. The 118.50 level caused a bit of support previously, and it looks like it is repeating that again after the Friday session.
Keep in mind that this essentially is a question as to whether or not the Federal Reserve will be able to raise interest rates. At this point in time it looks like the employment numbers gave us a mixed answer, but at the end of the day there are enough hands out there that the Federal Reserve members are ready to go ahead and do it. The Bank of Japan on the other hand is light years away from raising interest rates, so that of course should favor the US dollar over the Japanese yen. Ultimately, the market should continue to find buyers eventually, and as a result we think that a lot of participants will be looking at the US dollar is offering value at this point.
The massive hammer that formed several sessions ago should continue to convey that there are always people willing to get involved in this market to the upside. We don’t see any change in that, and it looks like the 118.50 level is perhaps offering the possibility of support and possibly even a “double bottom.” If we do continue to see buyers in this area, it’s probably only a matter of time before we head to the 122 level, which is the top of the consolidation region, and as a result we think that a bounce is going to be someone imminent. Even if we fall from here, we are not interested in selling.
