USD/JPY bounces around during the trading session on Wednesday

The US dollar pulled back a bit during the trading session on Wednesday, reaching towards the 106 level, before building a bit of a base and bouncing during the US session. The market looks very likely to continue to be difficult to deal with from a longer-term perspective, at least until we get the Nonfarm Payroll numbers coming out this Friday. Once we get that all the way, we could get a more significant move. If we can break down below the 105 handle, that could send this market much lower, perhaps down to the 101 handle.

Ultimately, if we bounce from lower levels I think that the market will continue to reach towards the 107.50 level, which has been resistance previously. If we can break above that level, it’s likely that the market will then go to the 110 handle as it has been a significant level in the past. I believe that back and forth range bound trading is probably about as good as it’s going to get over the next couple of sessions, so perhaps looking towards stochastic oscillators and the like to figure out when we are overbought and oversold. I believe that ultimately the buyers should come back, but we will need some type of stability first, and then possibly a strong jobs number to help. If we get a horrible jobs number, that could be very negative, but between now and then I think it will be very difficult.