USD/JPY Forecast July 10, 2017, Technical Analysis

The USD/JPY pair shot through the roof during the day on Friday as jobs numbers came out better than anticipated. We tested the 114 handle, which of course offers a certain amount of resistance. If we can break above that significantly, then we will challenge the 115 level after that. The 115 level being broken to the upside is a very bullish sign and becomes a longer-term “buy-and-hold” situation just waiting to happen. The 113-level underneath offers a bit of a “floor”, and I believe in buying on the dips going forward. After all, the Bank of Japan continues to be very dovish, while the Federal Reserve is very hawkish.
Interest rate differentials
US treasuries are starting to pick up interest rates, and that of course will continue to be bullish for this pair as the market tends to be highly influenced by the 10-year notes. Because of this, I believe that we will eventually break out, and that every time we pull back a is a buying opportunity and offering a significant amount of value. Ultimately, I believe that we break above 115 and go looking for the 118 level after that. If we did breakdown below the 113 level, that would be very negative, but I do not expect that to happen, so I remain bullish but I also recognize that volatility is here to stay.