The USD/JPY pair did almost nothing during the session on Friday, but this still is one of the markets that I’ve been paying the most attention to, as I believe we are setting up for a nice long-term move over the course of the next several months, if not years. After all, we have gone quite a bit higher recently, and this pullback really isn’t much in the big scheme of things. After all, when we pulled back, we only fell to roughly 103, which isn’t exactly a massive fall.
That being said, I need to see some type of supportive candle in order to start buying, or perhaps a break to a fresh, new high. The 105.50 level would have to be overcome for me to be comfortable buying, and less of course we get some type of supportive candle at lower prices, which of course would represent value.
A battle of two central banks.
Both of the central banks involved in this currency pair are currently working with monetary policy to influence their currency and its worth. The Bank of Japan of course is working against the value of the Japanese yen, and as a result it should continue to put pressure on the value. After all, monetary policy in Japan has just started up again, and therefore there should be more expansive monetary policy is coming up. On the other side of the Pacific, we have the Federal Reserve which of course has just recently tapered. Tapering off of quantitative easing in the case of the Americans means to slow down the bond purchase program, which of course does drive up the interest rates and therefore makes the currency a bit more appealing.
The market going forward should continue to be positive, and this will be especially true if the jobs market in the United States starts to pick up a little bit. After all, the Federal Reserve has already stated that it is concerned about the employment situation in America as far as tapering is concerned. Therefore, if the jobs market picks up, the Federal Reserve will be much more likely to go ahead and do so. Because of this, it’s likely that the jobs numbers will continue to move this pair massively, but in the end I believe that the writing is on the wall so to speak.
