The US dollar has been back and forth against the Japanese yen all day on Tuesday, reaching down towards the ¥105 level before bouncing towards the ¥105.60 level and then falling again. At this point, the market is very choppy but it does look like we are trying to break down and through the ¥105 level. If and when we do that, it could send this market much lower, with the initial target being the ¥102.50 level. After that, I suspect that we would then go to the ¥100 level underneath, which I believe would attract a lot of attention out of the Bank of Japan.
USD/JPY Video 14.08.19
All things being equal, I believe that the market is going to have plenty of sellers above on a bounce, so at this point I think that we are simply going to be waiting for signs of exhaustion to take advantage of. That being said, if we were to break down below the ¥105 level, the market could continue to go much lower and rapidly. I don’t really have a scenario in which I go long, unless we take out the ¥107 level, but even then I would be a bit surprised if we could go much higher. Ultimately, this market is a little bit overextended to the downside but it most certainly favor the downside as it is more of a “risk off” move to fall in this pair, which makes quite a bit of sense as there are so many major issues going on around the world right now.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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