The US dollar has fallen against the Japanese yen on Friday, but still sees support just below current levels.
USD/JPY
The US dollar has fallen significantly during the trading session on Friday as the jobs report came out at negative 23,000 jobs instead of the expected addition of 85,000 jobs. That being said, I'm watching the technical behavior of the market, and it has bounced a bit from the bottom. Historically speaking, a lot of times the non-farm payroll Friday situation is murky at best, and trading in a thin season, we'll see.
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We're hanging around the 200-day EMA and still above the close from 3 or 4 days ago when we bottomed out, at least temporarily. The interest rate differential still favors the US dollar by a mile, with the slight dip in rates during the day. It provided a little bit of relief for the yen from the US dollar rallying over the last couple of days, but the reality is that it's difficult to go into the weekend unless you're a longer-term trader, I suspect, to be fully confident of anything because there are a couple of different scenarios that could play out here.
Central Bank Intervention Concerns and Carry Trade Strategy
Maybe the Bank of Japan and the US authorities intervene again. It's very possible. They did that basically after the markets closed on Friday and on Sunday again. That could be a potential move. But on the other hand, you could have interest rates spike if something flares up in the Middle East, so that makes this a very tenuous market. And while all markets are somewhat tenuous at the moment, this is particularly interesting because we have had central bank intervention.
High risk, high reward is what I see here. I've been long of this pair for months. I'm going to stay, at least for now, long, just building my position up as time goes on, taking advantage of the interest rate differential. If we were to break down below the 155 yen level, I'd probably close out my position then, with probably 60% of my gains being the swap at that point. But I digress. As things stand right now, we're dancing around the 200-day EMA, which makes sense as well.
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