The US dollar dropped a bit against the Japanese yen during early trading on Monday as most banks around the world were closed. Ultimately, it seems as if the market is drifting a bit lower towards perhaps the ¥107 level. If the market breaks down below there, then it’s likely that the next target will be the ¥105 level, possibly even the ¥102 level. In the short term, I believe that the market will continue to be very choppy, but overall I feel that this pair is a bit more neutral than anything else. I think at this point we are probably looking at a scenario where you can probably use this chart as an indicator of Japanese yen strength or weakness. Ultimately, I think that this is best used as a way to decide how to trade other pairs like AUD/JPY and EUR/JPY.
USD/JPY Video 14.04.20
I believe that the upside is probably protected by the ¥111 level, extending to the ¥112 level. If we were to break above that level, then we certainly could go much higher. I am a bit suspicious about any move towards that area, because it would certainly be a major “risk on” environment, something that has supposedly been thrown into the marketplace due to the Federal Reserve and all of its injection of liquidity, but notice how this pair has moved along with that. Something isn’t quite right so it’s best to leave this particular pair alone in the short term.
This article was originally posted on FX Empire
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