The US dollar has drifted a little bit lower during the trading session on Thursday as the ¥107.50 level continues to offer resistance. The 50 day EMA is sitting at that level, so it does make sense that we will continue to see the market struggle going forward as well. If that is in fact going to be the case, then ultimately I believe that this market will drift a bit lower from here and go looking towards the ¥106 level which is the area that we have seen a bit of a “double bottom”, which is a very supportive level that I think will continue to cause an issue. If that level gets broken down below, then the market is likely to go looking towards the ¥105 level.
USD/JPY Video 10.07.20
To the upside, the market breaking above the ¥107.50 level could open up the door towards the 200 day EMA which is closer to the ¥108 level. At this point, breaking above there would go looking towards the ¥110 level. That seems to be unlikely though, considering that the market simply is drifting and as you can see the market simply cannot seem to keep the gains. This of course could be due to the fact that the Federal Reserve is continuing to flood the market with US dollars, and of course this pair does tend to drop in times of concern, which we clearly have plenty of things to worry about out there. With that in mind, I think that you continue to fade short-term rallies in this market until the climate changes.
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