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Christopher Lewis
USD/JPY daily chart, October 02, 2018

The US dollar has rallied rather significantly against the Japanese yen during the day on Friday, as we continue to see a lot of bullish pressure. The Japanese yen pair has a significant resistance barrier near the ¥114.50 level, an area that is going to continue to be important. I think that will be the next target, and I think that the market is certainly going to go looking for that area. At this point, more than willing to buy dips that show signs of support, as the ¥113.25 level should be rather supported. Buying the dips is the best way to deal with a breakout like we have had, but that doesn’t necessarily mean that it is going to be easy. Obviously, this pair is sensitive to overall risk appetite, which has of course been in flux.

The interest rate differential does seem to be one of the main drivers of this pair, which is a refreshing change of pace. This is how currency markets typically would function historically, but in the ultra-low interest rate environment that the market has been in for 10 years has distorted the way these pairs  operate. I think that the ¥113 level underneath is the “floor” of the uptrend in the short term, and as long as we can stay above that area I believe that the buyers will continue to push. Eventually, I would anticipate that the 114 point 50 Yen Level Will Give Way, and we will probably reach towards the ¥115 level. Breaking above there, it’s very likely that we go to the ¥120 level based upon longer-term charts.

USD/JPY Video 01.10.18

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