The US dollar flat against the Japanese yen on Friday

The US dollar has been flat during trading on Friday, after initially pulling back over the last couple of sessions. The lack of liquidity on Friday would have made trading very difficult, but I think that the 106 level will offer a bit of support. After the impulsive move to the upside, I think that the USD/JPY pair will go looking towards the 107 handle. Remember that this pair is highly sensitive to the trade war talks between the US and China, and if things start to flare up, this pair will probably drop rather drastically. Otherwise, if we get some type of agreement, and by extension some type of optimism, the market should go much higher, perhaps reaching towards the 107.50 level.

If we can break above the 107.50 level, the market should then go to the 110 handle. I think that breaking above there would be a very bullish sign and could send this market looking towards that level rather quickly. I believe that the fight at 107.50 is going to be monumental and will hinge almost solely upon trade war talk. I think that we will continue to see a lot of noise, so the short-term pullback that happens occasionally should offer value that people will take advantage of. The market will obviously be very noisy, but that’s nothing new for this pair. If we were to roll over and break down through the 105 handle, that would be a very negative sign indeed.