The USD/JPY pair has gone back and forth over the last couple of weeks, and the Friday session of course was no different. The 122 level offered more than enough support during the day on Friday to turn things back around and send the market back towards the 123.50 level. However, this consolidative area suggests that the buyers will eventually take off to the upside. Ultimately, I believe that we will break above the 125 handle, and once we do the market will be more or less a “buy-and-hold” type of situation.
At this point in time though, I think that the markets will continue to be choppy and short-term focused. I’m buying short-term pullbacks, and taking profits fairly quickly. The jobs number was fairly strong on Friday, and as long as they continue to be, this market will eventually break out to the upside. The question is whether or not we can do it between now and the end of the year? I’m starting to think that we won’t. However, keep in mind that liquidity is an issue during the month of December so we could get a bit of a move.
Multiple Support Levels
I think that there are support levels of the 1.3 .50 level, the 122 level, and the 121 level. Ultimately, I believe that the 120 level is essentially the “floor” in this market, so therefore I have no interest in selling this pair at all and believe that any pullback with a supportive candle is reason enough to start going long yet again. The Bank of Japan will continue to work against the value of the Japanese yen as they add more and more stimulus to the Japanese economy.
On the other side the Pacific, you have the Federal Reserve which of course will have to raise interest rates the least once, but if we find yourselves getting more and more bullish numbers out of the jobs market in America, that may lead to a rate hike cycle, which should send this market much higher.
