The US dollar fell against the Japanese yen in early trading, cracking below the ¥107 level. Looking at this chart, we could see a little bit of a bounce from the ¥107 level but I think at this point it is more or less a technical bounce more than anything else. Short-term rally should be selling opportunities, as we are well below the 61.8% Fibonacci retracement level. That is an area that once broken typically sends the market down to the 100% Fibonacci retracement level.
USD/JPY Video 26.06.19
Quite frankly, this is a market that has much further to go to the downside. As markets look for safety, they will buy the Japanese yen, which of course makes quite a bit of sense. There has been a lot of geopolitical tension and of course we have the US/China trade situation isn’t helping anything. Rallies will be sold, unless of course we can break above the ¥108.70 level, which could change the overall attitude. I think at this point you should be looking at weakness on short-term rallies to find “value” in the Japanese yen.
I don’t think that the ¥105 level gets broken anytime soon, but it certainly makes a reasonable target. This will be especially true if it’s obvious that the Americans and the Chinese can get it together in Osaka, which quite frankly I don’t expect to see. With that, the Japanese yen should continue to be favored by currency traders around the world, at least until we can get more positive geopolitical and economic numbers.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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