The US dollar has gone back and forth during the course of the week, ultimately forming a bit of a neutral candlestick. At this point, the ¥109 level underneath would be an area of support as you can see, but even if we break down below there, I think there is plenty of support near the 200 week EMA, which is also coinciding with the 38.2% Fibonacci retracement level.
USD/JPY Video 14.05.21
In general, this is a market that I think continues to see a lot of choppy behavior regardless of what happens next, but the question here is whether or not we can build a little bit of momentum to finally take out the upside at the ¥111 level. If we can, then that could be the beginning of something rather large, but we are a long way away from doing that. Looking at this chart, you can also make a bit of an argument for a potential bullish flag forming, so we will have to wait and see how that turns out.
Keep in mind that the market is also heading into the summertime, which means that we might see very quiet trading. We certainly have seen that over the last couple of weeks, and we could possibly just settle into some type of range for the next couple of months. We will have to wait and see how this plays out, but essentially what I see here is a range between ¥111 on the outside, and the ¥108 level on the bottom. In other words, we are right about in the middle of it, so this is more or less a “50-50 shot” in either direction just waiting to happen.
For a look at all of today’s economic events, check out our economic calendar.