USD/JPY Price Forecast – US dollar rallies after strong jobs number

The US dollar rallied a bit during the trading session on Friday after a very strong jobs figure for the month of January. By breaking above the top of the hammer that forms for the Thursday session, it does suggest a bit of strength. However, I do see a significant amount of resistance at the ¥110 level, so it’s very likely that what we will see selling just below that level. Beyond that obvious structural resistance, we also have the 50 day EMA that is sloping lower and just above that handle. It is because of this that I believe a rally is somewhat short-lived.

USD/JPY Video 04.02.19

One of the biggest influences on this pair is going to be the Federal Reserve, which has suggested that we are going to see lower rates for an extended time. That of course weighs upon the US dollar. It’s a bit ironic, because this market could go higher based upon stronger returns in the stock market, even though the US dollar would be soft against other currencies around the world. I think at this point, the upside is somewhat limited anyway, especially considering that the stock market has a lot of resistance above as well. If we do break above the ¥110 level, then ¥111.50 would be the next target. That seems to be very unlikely though.

What I think is more likely is that signs of exhaustion will send this market back down to the ¥108 level, which should be massive support. Below there we could go to the ¥170 level, and then eventually the ¥105 level. Choppiness is the one thing you can count on.