USD/JPY Forecast September 22, 2017, Technical Analysis

The US dollar was reasonably quiet during the session on Thursday against the Japanese yen as we consolidate above the 112 level. Currently, it looks as if the 112 level will offer a bit of support, and if that’s the case, we could bounce from here. However, I also believe that a breakdown below there could have the market looking for the 111.25 handle. That would wipe out the impulsive move from the Wednesday session which of course would show signs of significant exhaustion. If we can break above the 112.75 handle, then I think we continue to march towards the 114.50 level above which is the top of the larger consolidate of area. I think we are going to see volatility regardless of what happens next, and this market should continue to offer short-term trading in both directions. Longer-term, I think that the uptrend continues, because quite frankly the Federal Reserve is a bit more hawkish than people anticipated.
This was telegraphed
The Federal Reserve has been very vocal about its desire to shrink the balance sheet, so this should not have been a major surprise for the market. However, it’s obvious that the market had talked itself into believing that the Federal Reserve would step away, but at the same time it’s obvious that currency traders suspected this was coming. We have seen a bounce in this market for several days now, and now that the North Korean situation seems to be calmed down, that should help this market rally as well. I think pullbacks should be looked at as buying opportunities, and quite frankly we can use one. However, if we don’t get it, I have the parameter of 112 to look at for support on the next light higher.