The US dollar has initially tried to rally during the course of the trading session on Tuesday but gave back the gains as we got close to the 50 day EMA. We have formed a bit of a negative candlestick, and as you can see the market has been rolling over for a while. The US dollar has been strengthening against everything else, but the Japanese yen is of course considered to be the “ultimate safety currency.” With this being the case, I think we will continue to see more of the same, as people are concerned about the Delta variant and the possible shutdown of the world’s economy yet again. While that might be a little bit of a stretch, it is obvious that some economies around the world are certainly going to be hit, perhaps causing supply chain shortages to expand.
USD/JPY Video 21.07.21
In other words, it is also worth noting that the market is at the top of a significant range, which sees a lot of resistance on longer-term charts between the ¥111 and the ¥112 region. That being said, looking at the longer-term chart, it is easy to see where we could pull back from here, so I think this all lines up quite nicely. At this point in time, the market is likely to go looking towards the 200 day EMA underneath, which of course is a major technical indicator for a lot of traders. With that being the case, the market is going to continue to be erratic to say the least. If we do break down below the 200 day EMA, it opens up a move to the ¥107.50 level.
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