The USD/JPY pair had a pretty volatile session on Friday, as the market shot above 104, pullback, and then shot higher. We closed just below the 104 level at the end of the day, and as a result I believe that the market is trying to get above that handle. However, the volatility that I see in this candle on Friday suggests that the market will be struggling at this point to go higher. It doesn’t really matter to me though, because the 103 level is an area that had been resistive, and now should be supportive as “what was once the ceiling should now become the floor.”

That break out was of course something that caught my attention, and I believe now we should see plenty of buyers do the same thing somewhere near that area. Supportive candles between here and the 103 level is reason enough to go long, just as a break above the range of the Friday session would be. I believe that the next target is going to be 105, which should be a pretty significant barrier going higher. Ultimately though, I believe that we will break above there as well.

Bank of Japan and its monetary policies.

The Bank of Japan continues to keep its monetary policy very loose, while the Federal Reserve is looking to tighten its quantitative easing policy. This allows for the US dollar to appreciate in value, and should continue to be that way as long as the US economy continues to look like it’s one of the better ones out there.

Ultimately, I believe that this is a longer-term “buy-and-hold” type of situation, but expect a lot of choppiness between here and the 105 level. The interest-rate differential should continue to widen between the two currencies, and therefore the US dollar should continue to gain against the Japanese yen. On top of that, the Bank of Japan wants to see the Nikkei rise overall, and a loose monetary policy should force money into that market, making this market almost assured to go higher.

USDJPY 82514

Related Articles
  1. Savings

    Easy Ways to Go Green and Stay Budget Friendly

    Social entrepreneurs recruit "skeptics" to team green, by providing economically efficient products and services that minimize consumers' carbon footprint.
  2. Investing

    Top Investment Banks In The Energy Industry

    Many global Investment banks are highly involved in the energy industry, but there are also some smaller banks and boutiques that are strong players.
  3. Stock Analysis

    How Expensive Is Whole Foods, Really?

    Learn about Whole Foods Market, Inc., and discover how Whole Foods pricing actually compares to that of other grocery store operations.
  4. Markets

    How Does Flatiron School Work and Make Money?

    Examine the Flatiron School as it pertains to the product it offers; learn how it monetizes its product and the role the school plays as an industry disruptor.
  5. Stock Analysis

    4 Quick Service Restaurants for Your Portfolio

    Learn about the four quick service restaurants with attractive investment theses and growth prospects that can be valuable additions to your portfolio.
  6. Stock Analysis

    The 5 Best Dividend Stocks in the Healthcare Sector

    Learn about the top five dividend stocks of companies operating in the health care sector that generate substantial cash flows to afford high payouts.
  7. Investing

    Baby Boomer Philanthropy Shifts Wealth Adviser Focus

    Wealth advisers who integrate philanthropy and finance planning can stand out with baby boomer clients.
  8. Investing

    Why Disrupting Television Will Take Time 

    The growing popularity of YouTube and Netflix has given rise to dire predictions about television's death. But here's why the medium may prove to be resilient.
  9. Taxes

    The Top 10 Caribbean Tax Havens

    Discover relevant tax policy information about the top 10 tax havens located in the Caribbean, including the Cayman Islands and the Bahamas.
  10. Retirement

    The 5 Best Retirement Communities in Dallas, Texas

    Discover why the Dallas/Fort Worth area of Texas is a popular retirement destination, and five of the best retirement communities in the area.
  1. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
  2. Who decides to print money in Russia?

    The Central Bank of the Russian Federation (CBRF), like its peers in most countries, is the governmental entity responsible ... Read Full Answer >>
  3. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  4. Does working capital include prepaid expenses?

    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>
  5. Does working capital include short-term debt?

    Short-term debt is considered part of a company's current liabilities and is included in the calculation of working capital. ... Read Full Answer >>
  6. Do mutual funds pay interest?

    Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!