The US dollar initially drifted a bit lower for the week, but then turned around to show signs of life again against the yen. It has been rather resilient against the Japanese currency, and now it looks as if it is going to try to get back to the ¥115 level. That is an area that has been massive resistance on longer-term charts, so it certainly will capture a lot of attention. If we were to break above there, then the pair could possibly be a “buy-and-hold” type of scenario. That being said, I do not necessarily think it happens between now and New Year’s Day, just simply because of the lack of liquidity.
USD/JPY Video 27.12.21
Keep in mind that the Japanese yen is considered to be a safety currency, so as long as traders are willing to put risk on, and typically works against the value of the Japanese yen. The pair seems to be very stubborn about falling, and therefore I think it is probably only a matter of time before we get that breakout. I do not think it happens right away, but maybe after the nonfarm payroll in January we may get that move. This pair does tend to be highly sensitive to the nonfarm payroll numbers, so it would line up quite well with typical flows.
If we were to turn around a break down below the ¥112.50 level, then we could see a significant pullback. I do not necessarily see that as a real threat though, because we have seen so much in the way of resiliency every time this pair has pulled back over the last couple of months.
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This article was originally posted on FX Empire
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