The US dollar has gotten hammered against the Japanese yen during the trading session on Monday to kick off the week, reaching down towards the ¥105 level. This is a market that has a lot of crosswinds at the same time, as the US dollar itself is getting hammered, but at the same time we are seeing stock markets rally significantly, something that typically picks this pair up.
Overall, it is obvious that markets are focusing on the US dollar more than anything else, so I do like the idea of picking up bits of value as they occur, and it is also worth noting that we are near a major uptrend line. I think that the ¥105 level holds, at least in the short term. Longer-term though, it is very likely to break down. After all, the US dollar is in serious trouble to say the least, as we are seeing the US dollar get beat up on by almost all currencies.
USD/JPY Video 28.07.20
If and when we break down below the ¥105 level, I think it is very likely that this market goes looking towards the ¥102 level, an area that has been crucial more than once, and will clearly attract the attention of the Bank of Japan. Underneath there, then the dreaded ¥100 level could be targeted next which is an area where they have intervened more than once. In the short term, do not be surprised at all to see a rally towards the ¥106 level, possibly a little bit above there, before sellers step back in and push this lower. We have seen a definite shift in this pair to the downside.
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This article was originally posted on FX Empire
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