The US dollar has initially fallen during the week against the Japanese yen, reaching down well below the ¥105 level. Having said that, the market has turned around to form a nice-looking hammer -type candlestick. This suggests that we could continue to see a bit of a pushback, so it is possible that we can take advantage of the overall range and look at the 107.50 level as an area to start selling. I would not necessarily be a buyer here, even though the candlestick does suggest that there are plenty of people willing to do so. I think at this point we are still kind of stuck here, which makes sense considering that the pair features a couple of safety currencies.
USD/JPY Video 03.08.20
All things being equal, I do think that eventually we get a nice selling opportunity, but things can always change as you know. The 50 week EMA is starting to curl towards the ¥107.50 level so I think at that point there will be enough technical pressure to keep this market struggling. All things being equal I think that it is only a matter of time before we do get a breakdown, mainly because of the Federal Reserve and its desire to flood the market with greenbacks. It is also worth noting that almost all of the pushback came on Friday, so we could have seen a significant amount of profit-taking skew the candle to say the least. With this being the case, little bit of patient should offer a nice selling opportunity. However, if we were to break down below the bottom of the candlestick for this past week, that would be a very negative sign.
For a look at all of today’s economic events, check out our economic calendar.