USD/JPY Weekly Price Forecast – US Dollar Stalling

The US dollar has gone back and forth during the course of the trading week to hover around the ¥109 level. This is an area that I believe is going to continue to be very important and therefore I think what we are looking at is a scenario where we will have to make a decision based upon the candlestick that we have just formed. It is a pretty binary situation, if we break down below the bottom of that we are going lower and then should be looking for support at one of the large figures such as ¥108, ¥107, etc. However, if we break above the top of it then we are almost certainly going to test the ¥110 level.

USD/JPY

The interest rate differential in the 10 year note and the 10 year JGB is widening by the day, and that is a lot of what you have been seeing here. All things been equal, I think that a pullback is probably warranted, but I am not looking to sell it. This type of brutal move more than likely signifies that we are about to have a major trend change. I cannot guarantee that obviously, but if the Federal Reserve were to lose control of parts of the bond market, then I would be willing to back up the truck and by as big of a position as humanly possible. Nonetheless, if you wish to buy the US dollar you should probably do it against another currency and the meantime as we are overextended here.