The USD/JPY pair initially fell during the session on Monday, but as you can see found enough support below the 103 level in order to turn things back around and form a hammer. The hammer of course is supportive, but we have a shooting star from Friday as well, telling me that there might be a bit of confusion. Ultimately, the 103 level was massively resistive previously, and now should offer support as it appears to be doing so. This is classic technical analysis, so of course has caught my attention. On top of that, I have to admit that I am biased to the upside in this market longer term anyway, so of course I am short the Japanese yen at the moment.
Looking at this chart, I recognize that there is a lot of noise between here and 105, and ultimately I think that will be the target. Quite frankly, it really wouldn’t surprise me much to see the market hit the 110 level, which should continue to be a longer-term target in my eyes.
Bank of Japan
The Bank of Japan should continue to work against the value the yen, thereby keeping the interest-rate differential between the two currencies in favor of the Americans. On top of that, the jobs report on Friday was fairly robust, and that it generally has a positive correlation is not lost on me. That being the case, I do think that ultimately this pair goes higher and as a result I have been short the Japanese yen against several currencies, not just the US dollar. In fact, I have been buying the Turkish lira against the Japanese yen, as not only a growth play, but a massive interest-rate differential play. This pair though, without a doubt is the main driver of that one. The USD/JPY pair does look very bullish but do not limit yourself to just this pair. Regardless though, it is one that you can play and I fully expect to see profits come out of it. Just keep your eyes open as the Forex world offers plenty of possibilities.
