USD Finds Buyers Against JPY

Expect a lot of choppiness on Friday.

The US dollar initially fell during the trading session on Thursday but found buyers underneath to show signs of life yet again. Ultimately, this is a market that I think will have plenty of buyers regardless, as the Bank of Japan continues to work against yields in the bond market, meaning that they are essentially “printing Japanese yen.” If that’s going to be the case, then it makes quite a bit of sense that we would see other currencies benefit.

Furthermore, the Federal Reserve is much tighter than the Bank of Japan and is considered to be one of the most hotly central banks in the world. Because of this, it makes sense that the US dollar would continue to gain against the Japanese yen, and it is also worth noting that the US dollar is the currency in which most people measure strength or weakness, and therefore it does make quite a bit a sense that we would see this pair be the first one that people focus on.

However, if we continue to see the US dollar soften against other currencies, you may be better off buying something like the AUD/JPY or even the NZD/JPY as commodity markets have been so strong. Either way, this is a market that I have no interest in shorting, and I think that if we get a pullback during the Friday session, it’s very likely that the markets will look at that as a potential buying opportunity. The ¥126.50 level is an area that I think offers a significant amount of support, just down to the ¥131 level above offers resistance. Nonetheless, we are in a major uptrend, and therefore it makes sense that we would see plenty of momentum still in this market. I think that given enough time, we will probably have plenty of real estate to capture, over the longer-term more than anything else. I don’t have any interest in shorting, at least not until we take out the ¥125 level underneath, something that does not look very likely to happen anytime soon. Expect a lot of choppiness on Friday, as is pair is highly sensitive to the jobs report, but at the end of the day I would anticipate that any selloff attracts buyers as there have been so many recently.