This is going to be an interesting market over the next several weeks, if not months as we have the Federal Reserve cutting interest rates. That is negative for the US dollar in general, but overall this pair does tend to follow risk appetite. In other words, if the US dollar falls everywhere it won’t necessarily follow here. The Japanese yen is a safety currency, so keep that in mind, and if we break down significantly in risk appetite around the world, perhaps seen in the stock markets as an example, then this market will probably continue to go lower. The ¥107 level has been rather strong support though, so will have to wait to see whether or not that can be broken.
USD/JPY Video 23.07.19
The pair is dancing around the 61.8% Fibonacci retracement level, so that is something worth paying attention to. This is an area that will attract a lot of order flow, and potential buyers. However, I think at this point you should probably look at this market as simply consolidating between the ¥107 level on the bottom and the ¥108.50 level on the top. Expect a lot of confusing and choppy trading, but quite frankly I think if you are short-term trader you may be able to have opportunities in both directions based upon the levels that I mentioned. If we can break above the ¥108.75 level, that could send this market much higher. Alternately, a daily close below the ¥107 level opens up a move down to the ¥105 level.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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