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USD/JPY fell during the Friday session as the US jobs numbers came in rather anemic. Because of this, it appears that the Federal Reserve will be forced to embark on quantitative easing yet again, and this should continue to weaken the US dollar overall. However, this pair is a fight between two central banks trying to weaken their currencies. Because of this, it will be as clear-cut of his case as you see in some of the other currency pairs such as the NZD/USD, AUD/USD, EUR/USD, etc.
The Bank of Japan has been aggressively working against the value of the Yen, and as such we believe that it is very likely they will attempt some other type of monetary policy to achieve this goal after the Federal Reserve does its move. The 78 handle seems mysteriously strong recently, and as such we think it is the level that the Bank of Japan is intervening in at this moment.
The Bank of Japan has admitted to clandestinely intervening in this currency pair before, and it was somewhere around this general vicinity. With this in mind, and the fact that these 78 handle simply will not give way it isn't a real stretch to think that the central bank could be pushing the currency pair above the 78 handle.
It is rather curious that the trade fell all the way down to the 78.00 before bouncing during the Friday session. It was right at the handle that the pair suddenly couldn't break through. This looks suspiciously plan, and as such we can only assume that the Bank of Japan is involved. It is because of this that we are actually bullish of this pair, but need to let the dust settle first.
We will be looking for supportive candles right around the 78 handle in order to go along of this pair. We still believe that the market once the bounce around between 78 and 80, and as such we would like to take advantage of this. This pair does take a lot of patience at the moment as it seems to be stuck in first gear.
It is possible that we break down below the 78 handle, but we think the Bank of Japan intervenes below there and aggressively so. This is why we would not hesitate to buy supportive action below 78 as well.