USD/JPY forecast for the week of September 25, 2017, Technical Analysis

The US dollar rallied during most of the week against the Japanese yen, breaking towards the 112.50 level. We did find some resistance above though, and it looks as if the sellers have not completely given up. However, I think that if we can break above the top of the weekly candle for this previous week, the market should then go looking towards the 115 handle above. I believe that a break above there signifies that we have just finished a “W pattern”, one of the most of bullish patterns that you can form. Ultimately, I believe that if we do pull back, there should be plenty of buyers underneath, and that the absolute “floor” in the market is closer to the 108 handle.

With the Federal Reserve suggested that they were going to continue shrinking the balance sheet of the central bank, that should continue to drive the value the US dollar higher, as we are getting closer to a tightening cycle in the United States, while the Japanese economy will more than likely need to see continued liquidity. Because of this, I believe that eventually the US dollar rallies against the Japanese yen significantly, especially considering of stock markets can continue to look bullish in general. If they roll over, that could be a negative influence in this market, but I still believe that the 108 level will be the floor. If we were to break down below the 108 handle, that would be extraordinarily negative for this market, and could send us much lower. However, my base case scenario is that we continue to see buyers jumping into this market and taking advantage of weakness in the US dollar. The Japanese yen continues to sell off against most currencies, and this market will be any different.

USD/JPY Video 25.9.17