USD/JPY Forecast May 29, 2017, Technical Analysis

The USD/JPY pair fell significantly during the course of the session on Friday, dropping all the way down to the 110.80 level. We bounced off of their to form a rather bullish move, but ultimately I think this pair is going to continue to struggle overall, as it is highly sensitive to risk appetite, which seems to be waning as I write this. The 110 level below should be massively supportive, but if we break down below there we could drop to the 108 level rather quickly as there is a gap that has not been filled. Longer-term, I still believe that this market goes higher, but it may take some time to get to loftier levels. I believe that there is a massive barrier at the 112.50 level, and that breaking above there would be a significant scalp to collect for the dollar bulls.
S&P 500
By paying attention to the S&P 500, you can use it as a general gauge to how this market may react, if it rallies, it can often lift this pair. However, we also have to worry about interest rates, so it’s very likely that the Federal Reserve raising interest rates will continue to put bullish pressure on this pair. If they do not, that would be disastrous but currently I believe that the Federal Reserve has a certain amount of its reputation at stake, so a June interest rate hike is all but assured. Pullbacks offer longer-term opportunities, but in the short term it looks as if the bearish volatility could continue as the market sees so much in the way of headline risk out there from places like Europe, as well as geopolitical concerns and of course noise coming out of Washington DC lately.