The USD/JPY pair shot straight through the atmosphere during the day on Wednesday, as the US GDP numbers came out much stronger than anticipated. Because of this, the US dollar gained everywhere, the Japanese yen been no different. The 103 level was the significant resistance barrier that the market has been fighting with for some time now, and as a result we feel that the market should probably pull back from this area first, especially considering that the nonfarm payroll numbers are coming out on Friday.
This pair tends to be very sensitive to that economic announcement, so it is difficult to imagine that the market will take off to the upside for any real length of time between now and then. We believe that buying pullbacks that print supportive candles might be the way to go. We see a significant amount of support been possible at the 102.25 region, and therefore would be very interested in buying those supportive candles.
On the other hand, the pair might try to “front run” the announcement, and as a result a break above the highs for the session on Wednesday would be reason enough to start going long as well. We believe that the market would then head to the 105 level, although and a choppy manner would be my suspicion. We believe that the market will eventually offer plenty of buying opportunities on dips, and continue the uptrend that we have seen for the longer term. This pair has gone nowhere during the course of this year though, so it is possible that we are getting ready to see the market try to break out and finally make some type of move.
Yet again though, you have to keep in mind that this employment numbers is one that moves this market drastically, so seen a break out during the session today is probably asking a bit too much out of the market as you can see. Ultimately though, we still believe that the breakout happens and now it’s only a matter of time before we get that momentum needed.
