The USD/JPY pair fell during the session on Friday, but bounced enough to form a hammer in the end. This of course means that the market is finding a bit of support down here, and this is looking more and more like a market that is trying to find a range in the general area in which to trade. The market is going to be choppy in my opinion, after all – it is a fight between two weak currencies, which always makes for a lot of noise.
The Federal Reserve may have tipped its hand this past week when Federal Reserve voting member Evans suggested that the Fed will need several months’ worth of data in order to decide on tapering off of quantitative easing. Because of this, I suspect that the Dollar will be on the back foot for the rest of the year at least.
Don’t forget the Bank of Japan either…
The Bank of Japan has recently started another easing program, and it throwing a massive amount of money at the problem. As a result the Yen will be somewhat weak as well. After all, if you look at the EUR/JPY or CHF/JPY pairs – you see the Yen is falling hard. However, the US Dollar has the Fed working against it, so this makes this pair a “stalemate” of sorts. It is different when you have a currency like the Euro that is doing somewhat well in the equation, rather than the Dollar which is getting pummeled.
The market still will try to find some kind of direction, and I have a “trigger” for buying at the 100 level. I figure that if the market can close above that level on a daily close, we will go much higher. However, this isn’t to say that the short-term trader can’t do well. In fact, I think that if the top of the hammer from Friday gets broken, there should be a nice short-term opportunity to buy this pair, and perhaps aim for the 99 handle. As far as selling, I am not that interested to be honest.
