By: DailyForex.com
The USD/JPY pair broke higher during the day on Monday, as we continue to bounce significantly. Because of this, I believe that the market is trying to build up enough momentum to finally break out to the upside, and with the Nonfarm Payroll Numbers coming out this Friday, it’s very likely that we are trying to “front run” that particular announcement, as it is so highly influential on this particular currency pair. Keep in mind that one of the biggest drivers of this market will be the interest-rate differential, and with the jobs number comes the possibility of the Federal Reserve trying to raise interest rates in the short-term. If that’s the case, this should continue to drive the interest-rate differential wider between the United States and Japan.
Buying Pullbacks
I believe that buying pullbacks will be the way going forward to collect profits. Ultimately, we could run as high as the 125 level in the short-term, but I do recognize that there is a line of resistance at that area that is rather strong. Ultimately, we will break above there given enough time, and I think it’s only a matter of time before we reach towards the 130 level after that.
I believe that pullbacks will represent “value” in the US dollar, as the Japanese yen is certainly being worked against by the Bank of Japan. The massive amount of quantitative easing that is coming out of Tokyo should continue to drive down the value of the Yen anyways, and with the US dollar showing such proclivity to go much higher, it makes sense that we will eventually rise every time we fall.
I believe that there is a massive amount of support somewhere near the 122 handle, but even if we get below there I think that the 121 and most certainly the 120 level should be supportive as well. In fact, at this point in time I have no interest whatsoever in selling.
