USD/JPY Price Forecast – US Dollar Initially Rallies but Gives Up Early Gains

The US dollar has initially tried to rally during the trading session on Friday but gave back the gains as retail sales missed in the United States. With that being the case, it looks as if the market is probably going to have to pull back in order to find some type of momentum play. The ¥110 level above certainly looks to be a bit of a barrier, as would be expected due to the large, round, psychological aspect of the figure. Nonetheless, we have broken above there so it should not be a huge surprise if we break out to the upside.

USD/JPY Video 17.05.21

To the downside, the 50 day EMA is sitting at roughly ¥108.50, and therefore I think that could be your short-term bottom in this market. Nonetheless, this is a market that I am looking to buy dips and therefore will wait to see for some type of supportive candlestick that I can take advantage of. Ultimately, I do think that eventually we could go to the ¥111 level, which was the major resistance barrier. As things stand right now, I think this is probably more a story of the Japanese yen than anything else, and then of course the interest rate differential between the two markets. Bonds in America do continue to see rising rates, and that should continue to drive this market higher. However, if we were to break down below that 50 day EMA it is likely that we then go looking towards the ¥107 level, which is near the 200 day EMA. All things being equal, I am bullish but also willing to wait for a better set up.

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