The US dollar has rallied a bit against the Japanese yen during the trading session on Friday, breaking above the ¥110 level. This is a continuation of the overall uptrend, but it should be noted that the last couple of large candlesticks have both been negative, which suggests to me that perhaps we are going to continue to see choppy trading going forward. From a longer-term standpoint, this makes quite a bit of sense as we are at the bottom of a bullish channel, but furthermore we also have a significant amount of resistance above at the ¥112 level.
USD/JPY Video 19.07.21
To the downside I think we are more likely than not to see plenty of “buy on the dips” traders down towards the ¥108 level, but that does not necessarily mean we cannot get there. After all, we are essentially pulling back from a major resistance barrier in the past so it makes sense that we could see a little bit of follow-through. At this point, it looks as if the market is trying to decide whether or not there really is follow-through, which of course could send this market much lower.
Currently, the Japanese market looks horrible, especially on the bond side. As long as that continues to be the case, it could make the Japanese yen a bit of a victim against other currencies, but there is also the argument about safety so eventually we will probably see the market rollover again. In the short term, I believe that this is a market that is going to simply bounce around sideways as we are hanging around the flat 50 day EMA as well.
For a look at all of today’s economic events, check out our economic calendar.