The US dollar has rallied a bit during the course of the trading session on Friday to reach towards the ¥110.50 level, an area that has been important a couple of times in the past, and it is an area that should attract a certain amount of attention. If we can break above the ¥111 level, then it is likely that we go looking towards the ¥112 level. That is a major resistance barrier going back several months and years, so if we can break above there then it is likely that we could continue a longer-term move.
USD/JPY Video 26.07.21
If we pull back from here, the 50 day comes back into the picture which happens to be just below the ¥110 level. Ultimately, this is a market that I think will try to decide what to do next, because if we break down below there then we could dip towards the ¥109 level. I think the only thing that you can count on in this market is going to be choppiness and noisy behavior. This makes quite a bit of sense considering that both currencies are considered to be “safety currencies”, and therefore it does make quite a bit of sense that we go choppy more than anything else.
In fact, when you look at this chart a lot of times you can use it as an indicator as to where the Japanese yen is going to moving in general. If this pair falls, a lot of times I will short something else like the AUD/JPY, GBP/JPY, etc. On the other hand, if this pair rises then it makes sense that this pair signals that those other pairs could go higher. In that sense, this is a tertiary indicator.
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This article was originally posted on FX Empire