USD/JPY Price Forecast March 19, 2018, Technical Analysis

The US dollar pulled back slightly during the trading session on Friday, testing the 105.50 level initially, but then bounced enough to show signs of life again. The 105.50 level is an area that I continue to think we will find buyers. The hotter than anticipated Industrial Production numbers month over month of course doesn’t hurt either, as it suggests that we may see higher interest rates coming out of the United States. While the market already knew that, this is just another reason to think that the Federal Reserve may be a bit aggressive in doing so. This of course is good for the greenback, as it will widen the interest rate spread between the United States and Japan.

I believe that the previous uptrend line underneath at the 105 handle continues to be a massive support level, and although we have had a nice bounce, I think we need to do more work to stabilize this position. If we were to break down below the 105 handle, I think the market would eventually go down to the 100 level, a significant move indeed. Alternately, a break above the 107.50 level would send this market looking towards the 110-level given enough time. I think that we are going to continue to see a lot of noise, but that’s not necessarily anything they would be out of the ordinary for this pair. I think that even short-term traders should be paying attention to longer-term charts, such as the daily chart as it could give us ideas of stabilization.