The US dollar has gone back and forth during the trading session so far on Monday, as the market seems to be a bit confused at the moment. Ultimately, the ¥104 level seems to be an area that a lot of people are paying attention to. With this being the case, it is very likely that we see a lot of support in this general vicinity. However, we have broken through a couple of times previously, so it does make quite a bit of sense that we would ultimately see it break down. It is worth noting that the last couple of lows have started to turn higher, but we are still very much in the midst of a long term downtrend, and it is also worth noting that the 50 day EMA above has caused major resistance more than once. In fact, there seems to be a “zone of resistance” between the 50 day EMA and the 200 day EMA above.
USD/JPY Video 01.12.20
To the downside I believe that the market could go looking towards the ¥103.25 level, followed by the ¥102 level if we do get some type of bigger breakdown. All things being equal, this would be a continuation of what we have been seeing for several months now, and with the US dollar depreciation around the world it would not be a huge surprise. Furthermore, you should keep in mind that the Japanese yen is considered to be a safety currency also, so there is the possibility that we run towards the Japanese yen if something undesirable happens.
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