The US dollar has pulled back a bit during the course of the trading session on Thursday only to turn around and recapture the ¥110 level. The 50 day EMA of course has offered some support as well, and that is something that is also worth paying attention to. With that in mind, it looks like the market is trying to rally and it should be noted that Japan has seen yields in the bond market go negative again, so that may continue to work against the value of the Japanese yen as well. Nonetheless, I think we also have to worry about the risk appetite parameters, which are starting to go all over the place.
USD/JPY Video 16.07.21
In general, we start to see more of a “risk off move” around the world, this pair will probably pay the price. It is worth noting that the massive candlestick from the Wednesday session is a continuation of some of the bigger ones that we have seen recently, and therefore there is a real threat to the downside at this point. On the other hand, to the upside we need to clear the ¥110.75 level to get through a lot of that noise, and perhaps make another run to the upside for about 100 pips.
I believe that this is a pair that is going to see a lot of choppy behavior, although I believe that the US dollar overall may do fairly well. In general, I keep my position size relatively small at this point, and I will be the first to admit that I typically use this pair as an indicator for other Japanese yen related pairs.
For a look at all of today’s economic events, check out our economic calendar.