The US dollar initially dropped on Friday but has turned around to show signs of life. With this, we continue to see longer-term traders buy into this pair. The interest rate situation continues to favor higher levels.

USD/JPY

The US dollar initially fell during the trading session here on Friday, but then turned around to show signs of life again. The Bank of Japan did intervene over the last couple of days, but quite frankly, there isn’t a whole lot that they can do to change the overall market behavior. This is an area that I think will continue to offer support all the way down to the 160-yen level. Turning around and breaking above the top of the candlestick on Friday would be a good sign, and I do think that the interest rate differential will continue to favor the US dollar.

The Bank of Japan and Japan’s Economic Outlook

The Japanese yen is in serious trouble. I think they have to look at this through the prism of the massive amount of debt in Japan, which just cannot be serviced with high rates. If that’s going to remain the case, then it’s only a matter of time before we go much higher.

Longer-term, I think we go as high as 244 yen. Right now, 224 yen is a measured move of the rounding bottom. Ultimately, I think this is a market that will remain choppy, and it will get intervened in occasionally, but I look at these drops in price as value. The interest rate differential remains huge.

Yes, I understand that the Bank of Japan intervened early on Friday, and then the non-farm payroll number came out weaker than anticipated, but we are light years away from the differential closing, and I still like this as a longer-term buy and hold, and I do add every time it drops.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire