(MENAFN- Daily Forex) The usd/jpy was relatively quiet against the Japanese yen during trading on Friday, but that's actually a good thing. After all, the pair had plummeted recently, and therefore stabilization could be thought of as the first attempt to turn things back around. If we do see this market take out the ¥141 level, at that point in time I will be a buyer of this pair.
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If we break down below the lows of this past week, then we could go looking for the ¥137.50 level, possibly down to the ¥135 level which is near the 200-Day EMA. Obviously, this is a market that would pay close attention to the 200-Day ema as it is a huge technical indicator. That being said, I do think that the market is likely to see a lot of noisy behavior if we do drop down to that area, especially as the interest rate differential between the 2 economies continues to be wide enough to drive a truck through. Choppiness and Volatility Ahead
The Bank of Japan continues to print unlimited yen in order to keep the interest rates in their bond market down, as they are buying unlimited bonds. The federal reserve remains tight, so it does make a lot of sense that we would continue to see the US dollar favored. However, you should also keep in mind that the market is going to continue to see this through the prism of whether or not the Federal Reserve is going to slow down its interest rate hiking schedule, but at the end of the day, it should be worth noting that James Bullard has recently suggested that the Federal Reserve will remain“higher for longer”, referring to the interest rate situation.
The uptrend line of course is worth paying attention to, and it's also worth paying attention to the fact that this area previously had been resistant back in late July, and now“market memory” is coming into the picture. Ultimately, we are still an uptrend, despite the fact that we have had a nice pullback. This is a situation where we will continue to see a lot of choppy volatility , but I look at pullbacks as buying opportunities going forward. Looking at this chart, I'm paying special attention that hammer from earlier this week as I think it could be a trigger for the short-term move.
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