USD/JPY Forecast May 30, 2017, Technical Analysis

The USD/JPY pair has been choppy during the session on Monday, as we continue to hover around the 111.25 level. The market looks very likely to try to stabilize in this area, but if we can break above the 111.50 level, the market should continue to go higher, perhaps reaching towards the 112 handle. Pullbacks after the breakout would be buying opportunities as the market tries to grind its way to the upside. I don’t have any interest in shorting this market, least not until we make a fresh, new low, as it would be a continuation of the selloff that happened a couple of sessions ago. Remember, this pair tends to be very risk sensitive, so we want to pay attention to stock markets and commodity markets overall, as it gives us a general feel for what the Japanese yen is about to do.
Stock markets
Pay attention to the stock markets around the world. They are one of the easiest to follow wrist barometers that you can find, and this of course will have a great influence on how traders feel about either buying the Japanese yen for safety, or running from it. Interest rate differentials still favor the US dollar, so I believe that longer-term we will have the buyers return, but there could be blips of noise between now and then. I believe that pullbacks will be supported, and I also think that there is a significant support level at the 110 level below. This is an area that I think will be important longer-term, and as long as we can stay above there I think that most of the selling has been done, and there seems to be much more of a threat to the upside than the down in the immediate future.