USD/JPY forecast for the week of August 14, 2017, Technical Analysis

The US dollar fell against the Japanese yen during the week, slicing through an uptrend line. However, there is a lot of noise in this area, and I also believe that a lot of this comes down to noise coming out of North Korea. There is a significant amount of support at the 108 level, and I think that if we turn around and break above the 110 level, it’s likely that the market could rally towards the 115 handle. Alternately, if we break down below the 108 level, the market could find itself reaching towards the 105 handle. Currently, looks as if the sellers are more or less in control, but this could turn around almost immediately if tensions settle down in Asia.

Risk appetite

Risk appetite is a huge factor when it comes to this market, and of course there is also the interest rate outlook as far as we can see. Ultimately, if we break above the top of the range for the week, the market should go much higher. I believe that there will be a lot of volatility, as the situation is still quite fluid between the Americans and the North Koreans, so small position sizing will be probably the best way to deal with this market. If we do breakdown, I expect to see a significant amount of support at the 105 handle.