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The 160-yen level is a large figure in the USD/JPY pair at the moment that a lot of people will be watching. If it were to get broken – it would be a big deal.
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So far, it is proving very tough.
The US dollar plunged against the Japanese yen during trading on Thursday as we can see the 160-yen level is still being defended. The 160-yen level is a large, round, psychologically significant figure that a lot of people will be watching because if we could break above there, then we could really start to challenge somewhere near the 160.40-yen level a breakout and a move that tops the highs all the way back to 1990.
With that being the case, I think you have to be very cautious, but you also have to understand that this is a market that will continue to be very noisy.
Interest Rates and Central Bank Divergence
We just had the Federal Reserve come out and sound pretty hawkish and at the same time, we have the Bank of Japan basically doing nothing but suggesting that perhaps we will continue to see very easy rates coming out of Japan.
I just don’t see a situation where this changes, but obviously there was a bit of a reaction to the chatter coming out of Japan. I think this is temporary and I do believe that we will end up seeing a little bit of a bounce.
I like the idea of buying a bounce, but I need to see a little bit of a V-pattern on shorter-term charts to get involved. I’m looking at the 158-yen level as a major support level but even if we break down below there, I think we’re looking at the 156 level as a floor.
I am looking for opportunities. I do believe that it will end up being offered here, but it is going to be noisy. After all we don’t break a 36-year high easily very often, so a little bit of a pullback and another surge higher make quite a bit of sense.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
