USD/JPY Weekly Price Forecast – US dollar finding support
The US dollar has bounced significantly from the 61.8% Fibonacci retracement level, forming a massive hammer. The markets look ready to continue grinding towards the upside, and quite frankly this strong uptrend looks ready to continue overall. The ¥114.50 level of course has been very resistance more than once, and therefore it wouldn’t surprise me at all if we go up to that level and then pull back yet again. However, that doesn’t mean that it’s going to be refused. I think eventually the higher interest rates in the United States will continue to drive this pair higher if nothing else.
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The Bank of Japan has suggested that inflation is rather tame, which has been the case for decades in Japan, so I think all things being equal we will continue to see this market rally. There could be the occasional selloff due to a run to safety, but those should be thought of as potential buying opportunities. Looking at this chart, it’s easy to see that people are willing to come in and pick up value as it appears. If we do finally break above the ¥114.50 level, then I think we go to the ¥115 level, which is a major break out for longer-term traders. The alternate scenario is that we break down below the 61.8% Fibonacci retracement level, and that could send the market back down to the ¥110 level. That would probably have something to do with some major headlines crossing the wires and a run to safety.