The USD/JPY pair initially fell during the session on Friday, but the release of the nonfarm payroll numbers juiced the market enough to push this pair well above the 101 level. The fact that the nonfarm payroll numbers came out higher than anticipated drove the interest rates in America higher, which of course is a major driver of this pair overall. As the Japanese are still trying to drive down interest rates and ease monetary policy, this should continue to weaken the Yen overall.
Money flows from East to West when American interest rates rise simultaneously with Asian interest rates falling. That being the case, it's a simple matter of "money goes to wear best treated" which of course is one of the basic tenets of finance to begin with.
103.50 And beyond
The 103.50 level is roughly where we topped off that way, and I think that we are heading back to that level and beyond. After all, this is a long-term trade in my opinion, and I have always remained somewhat long of this market regardless. I have been basically trading around a core position for months now, and I believe that Friday was a signal that the next leg higher is about to start.
On top of that, the Japanese haven't even had a chance to react to this news yet, and you know they will love to sell the Yen in this environment. After all, the United States is one of the major export markets for the Japanese, so this of course is good news for the Japanese economy as well. With that being said, I expect to see that this is a market that we can buy every time it falls back, and I also expect the 100 level to offer a significant amount of support going forward. On top of that, I believe that the 95 level is now the complete bottom of the market, and we will not see a sub 95 print anytime in the next several months. With that being said, I am long of this market, and getting longer.