The Dollar soared over 3% against the Yen on Friday following the market’s impressive turnaround. After the Fed slashed its interest rate to zero and announced QE, USD/JPY dropped over 1% to 105.73 from its 107.95 NY close. The big move lower was reminiscent of Blood, Sweat and Tears Spinning Wheel tune..”What goes up must come down…”
USD/JPY has immediate support at 106.30 followed by 105.70. Immediate resistance is now found at 106.85 and 107.35. Friday’s upmove in the USD/JPY pair was the biggest weekly advance since November 2016. All that says is expect further high volatility in this currency pair.
With US short term interest rates at or near zero, USD/JPY topside is now limited to 108.00. There should be an initial base at 105.50 and 105.00. The Bank of Japan will be monitoring any breaks below 104.50 as this would open the door for 101.50 and 100.00. Look for a likely trade between 105.50-107.50. Just trade the range of this puppy, be nimble, stay flexible. Establish your parameters and trade your levels.