The US dollar has initially rallied during the week but then turned around to show signs of weakness. At this point, the market has broken below the ¥107 level, but then popped back above it two days in a row. This shows that there is perhaps a certain amount of buying pressure just below, and of course the 50% Fibonacci retracement level has held as well. With that in mind, it’s likely that we could see a bullish candle stick or two ahead. This would coincide with a “risk on” move in the markets, but you will need to pay attention to a secondary market such as the S&P 500 to get confirmation.
USD/JPY Video 07.10.19
If the market was to break down below the bottom of the weekly candle stick, then it’s likely that the USD/JPY pair will go looking towards the ¥105 level underneath, which has been supportive previously. It’s obviously a large, round, psychologically significant number that will attract attention as well, so ultimately it makes a nice target. To the upside, a bounce will probably be contained by the previous high of the past couple of weeks.
The market will continue to hang on to headlines involving the US/China trade talks, which greatly influence what happens with the risk appetite in both the S&P 500 and the Japanese yen overall. As the headlines are slightly more positive, that should send this market higher. Obviously, the exact opposite can be true.
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This article was originally posted on FX Empire
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