USD/JPY Price Forecast – US dollar looking extended against yen

The US dollar has pulled back slightly against the Japanese yen after reaching the ¥111.50 level. This is a market that I have been saying for days looks to be trading in 50 pips increments, so this fits quite nicely with the trading thesis I have been working with. Ultimately, this is a market that I think will try to break higher over the longer-term, especially we can come back to fundamentals such as interest rate differential. However, there are the Sino-American trade relations conversation going on, so keep that in mind as well.

I think the market has plenty of support near the ¥111 level for buyers to commit it at that point, so this is probably just going to be more of a correction than anything else. The alternate scenario of course is that we break through the ¥111.50 level and continue to go much higher. If that’s the case, then I would target the ¥112 level, because not only does it fit nicely with the 50 pip increment attitude that we have seen in the market, it’s also an area that’s been important in the past so it would make sense that “market memory” would come into play there. I am bullish of this pair, but I also recognize that we may have gone too far in too short of time. Look at dips as value opportunities, I’m not interested in selling this market because of the interest rate differential that should continue to push to the upside. Remember, this pair tends to move right along with stock markets at times as well, which look healthy.

USD/JPY Video 27.08.18