The US dollar has initially tried to rally during the trading session on Tuesday but gave back the gains almost immediately as the market sold off drastically in a major “risk off” type of situation. However, during this day it may have had more to do with the US dollar losing strength as well. After all, the Australian dollar took off against the Aussie, so did the Euro.
In that sense, this may not be as “risk off” as it initially looks but we are still within the range of normal trading in this pair, as we have been range bound for some time. If that is going to be the case it is likely that we are going to continue to see a lot of negativity in the short term, but eventually the buyers will more than likely return. After all, this is a pair that has not gone anywhere for what seems like ages.
USD/JPY Video 24.06.20
That being said, the market has been trading between the 160 and level and the ¥110 level for quite some time. The ¥107.50 level continues to be very crucial, and therefore I think it will be a bit of a magnet for price. Looking at the chart, I believe that it is only a matter of time for we try to return to that magnet, so I would not be surprised at all to see this turnaround later in the day, or perhaps even first thing on Wednesday. If it does break down, it is not until we clear the ¥105 level that it becomes a longer-term signal. To the upside, anticipate a lot of noise around the 50 day EMA.
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This article was originally posted on FX Empire
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