The USD/JPY pair rose during the session on Tuesday, as the support that I anticipated below did in fact come back into play. This market has been consolidating for some time now, and as a result I think that we are looking at the summer range now. The 101 level on the bottom is massively supportive, and probably extends all the way down to the 100 level. On the other hand, I believe that the 103 level above is massively resistant. A close above the 103 level would of course change everything as it should signal the next leg higher. I believe we will eventually get this, but right now there doesn’t seem to be any catalyst to make that move happen.
On the other hand, the Bank of Japan will continue to try to work against the Japanese yen, and with the slow-moving summer markets, I find it difficult to think that this market is going to break down drastically. That’s exactly what it would take at this point in time, a drastic move down in order to break the support. In fact, I would expect the Bank of Japan to get involved below the 100 level.
Nonfarm payroll numbers come out on Thursday.
The nonfarm payroll numbers come out on Thursday, and that announcement tends to be one that this market follows rather extensively. With this, I feel that a strong jobs number will more than likely push this pair higher, but quite frankly I think that the simple technical support will do that as well. It really comes down to the jobs number as to how quickly it happens. Nonetheless, I think that the market has decided that this pair is going to stay in this area between now and August.
If we do get above the 103 level though, I believe that the 105 level will be tested next. If we break above the 105 level, we could head to the 110 level, an area that I thought this pair was heading towards this year. We don’t know that it’s going to happen between now and December 31, but certainly that should be the direction that we aim for.
