USD/JPY Forecast: Continues to Fall

Because of this, I will be paying close attention to how we close on Friday, but I do recognize that we get a lot of big moves during the day for no apparent reason, as people are either in and out of the market or quite frankly are bothered trading it. 

• The USD/JPY has fallen during the trading session on Thursday, and it looks as if we are going to continue to see a lot of negative pressure.
• At this point, we need to pay close attention to the ¥127 level, an area that is a major support level.
• That is an area where we could see a lot of support, but if we were to break down below it, the market could fall rather drastically as there’s a huge “air pocket” underneath there.

Keep in mind that Friday is the Non-Farm Payroll announcement, which of course will cause a lot of noisy behavior. At this point, we need to determine whether we are going to form some type of double bottom, or if we are going to break down rather drastically. If we turn around a break above the inverted hammer from the previous week, they can send this market higher, but we would need to see some type of catalyst to continue turning around.

Noise Ahead

Keep in mind that the Bank of Japan continues to see a lot of need to keep interest rates below 50 basis points on the 10-year JGB, so if rates start to rise again, that will certainly pummel the Japanese yen. However, as rates around the world continue to drop, it’s a lot less pressure on the Japanese yen. While there will be a lot of noise during the jobs number, and of course a lot of noise in the bond market, the reality is that the market will probably be very noisy during Friday, but how we close at the end of the week will tell us a lot, because how people feel about the currency market when they can do anything with the position for 2 days shows real conviction in one direction or the other.

Because of this, I will be paying close attention to how we close on Friday, but I do recognize that we get a lot of big moves during the day for no apparent reason, as people are either in and out of the market or quite frankly are bothered trading it. I am paying close attention to that ¥127 level though because if we break it down below there, we can see this market go all the way down to the ¥115 level before it’s all said and done.

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