The 160-yen level is a major floor in my opinion, with the 50-day EMA sitting there as well.
USD/JPY
The US dollar continues to see a lot of volatility during the trading session, especially as we got the job number coming out weaker than anticipated during the trading session on Thursday, but really, I think ultimately this is a market that will continue to be noisy and bullish. This sell-off, I think, opens up the possibility of buying US dollars on the cheap.
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The 160-yen level is a major floor in my opinion, with the 50-day EMA sitting there as well. To the upside, the 162 yen level is an area that I think will be difficult to overcome, but if and when we do that opens up the floodgates again.
Interest Rate Differentials and Bank of Japan Intervention
Keep in mind that the interest rate differential favors the US dollar, and despite the fact that the Bank of Japan did get involved in the market early in the day, all they can truly do is slow down the market if the market chooses to reprice the US dollar.
Breaking down below the 160-yen level opens up the possibility of 158 yen, but really, I don't see that happening easily. I am more than willing to buy the dips here and will do so in small bits and pieces.
I have been long of this pair for a couple of months, and this just gives me an opportunity to add to a position that longer term, could very well go as high as 224, maybe even 240 yen, but that's a long-term call. With the Bank of Japan dealing with massive amounts of debt that the US could only dream of, they can only do so much to protect the yen, and I think this will just end up being a buying opportunity yet again. We may have another day or two of weakness, but sooner or later, the buyers come back.
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