- The USD/JPY currency pair has fallen a bit during the trading session on Monday but found enough support underneath the uptrend line to show signs of life and bounce a bit.
- At this point, if we could break up the top of the candlestick, then the market could turn around and try to go looking for the ¥150 level.
- Ultimately, the market will continue to see a lot volatility, and perhaps a big fight right around this general vicinity.
- Keep in mind that the ¥137.50 level has been important a couple of times, and the fact that we have bounced from there is a good sign.
USD/JPY Higher in the Longer Term
The ¥140 level is a large, round, psychologically significant figure, and allows the possibility of a move up to the 50-Day EMA. If we were to break above there, then it’s likely that we could go much higher. The market has been a very strong one for quite some time, at least until recently. However, when you look at it from a longer-term standpoint, this is simply another pullback in what we have seen for a while. As long as we can stay above the ¥135 level, then I think we are fine and it’s likely that we could go higher in the longer term. However, if we were to break down below the ¥135 level, that correction could become much deeper. One of the biggest drivers would probably be the Bank of Japan and what it decides to do. If it were suddenly to abandon the yield curve control, then the Japanese yen would almost certainly strengthen quite drastically, and that could send this pair much lower.
On the other hand, a lot of what we are seeing are just interest rate expectations, as the Federal Reserve may be getting relatively close to slowing down or at least pausing the rate of acceleration and its rate hikes. However, it could be very noisy over the next couple of days, as the Core PCE number comes out of the United States, something that the Federal Reserve pays a lot of attention to. Beyond that, you also have to keep in mind that the jobs number coming out on Friday will almost certainly be very noisy, and that could give us a bit of a “heads up” as to where we go.
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