The USD/JPY pair fell significantly during the course of the day on Thursday, testing the 122 handle. The 122 handle is of course a large, round, psychologically significant number, and an area that we’ve seen buyers step into this market and push the US dollar higher. I think that it’s only a matter of time before this market rallies, and today being Nonfarm Payroll Friday, it’s very likely that the jobs number could be the catalyst.
You can also see that I have drawn a somewhat crude ascending triangle that we have been trading in. I think that between the potential ascending triangle and of course the potential rectangle, there are far too many reasons the think that this market will continue to go higher. After all, the US dollar lost quite a bit of its luster during the session not due to anybody wanting to on the Japanese yen, but more or less due to the European Central Bank stepping away from doing as much stimulus as people had anticipated. This increased the value of the EUR/USD pair, and that of course put pressure on the US dollar in general. And of course, this was a bit of a “knock on effect” felt against the Japanese yen.
Buying Dips. Still.
I believe that buying dips in this pair is still the way to go, and this could have been an excellent value play. I think that there is support below anyway, session near the 121 and the 120 handles. I think that this market will eventually try to reach towards the 125 level which has been my longer-term target for some time. That area could offer a bit of resistance, but in the end I think that it’s only a matter time before we break out above there. We could see quite a bit of volatility today, especially if the jobs number is stronger than anticipated. That will make money flow back into the United States. I have no interest in selling.
