The US dollar broke down a bit during the trading session on Wednesday, dropping from the ¥107 level. This is an area that was previous support, so the fact that it has offered resistance should not be a huge surprise. With that in mind I believe that the market will continue to go lower, perhaps reaching down towards the ¥105 level underneath which had been support. All things being equal, I do think that we are going to go down there but we need to be cautious as this pair is going to be very sensitive to the US/China trade situation. We are only one headline away from jumping around again, so at this point it’s very likely that we are going to see a lot of choppiness.
USD/JPY Video 15.08.19
If we do break down below the ¥105 level, it’s very likely that we go down to the ¥102.50 level, and then eventually the ¥100 level. In fact, that’s my base case for this currency pair but we always have to keep both sides of the scenario in the back of our minds. If we were to turn around and break above the ¥107 level, that would be a very bullish sign for the short term, but at this point I don’t think we are very likely to see that. They’re just far too many issues out there to believe that this market is going to be suddenly bullish without a major turn of events that aren’t foreseen at this point.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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