The US dollar has cracked below the ¥107 level during the trading session on Thursday, as we continue to see a lot of negativity out there. After all, the Dow Jones Industrial Average futures are down about 900 points at the open, and this typically favors this pair falling due to the fact that the market starts looking for safety in the form of the Japanese yen. If we can continue the momentum, the next support level is closer to the 160 and level.
USD/JPY Video 12.06.20
On the other hand, if the market saved itself yet again, then it is likely that we will go looking towards the ¥107.50 level, and then after that go looking towards ¥108. Moving above the ¥108 level allows for the market to go looking towards ¥109, and of course followed by ¥110. I do not necessarily think that we are suddenly going to rally, but then again it is easy to say what we “should” and” should not do”, because quite frankly the markets have not been paying attention to any of that for a while.
With this being the case, I continue to use this pair more or less as a Japanese yen strength or weakness indicator, and not necessarily trade it directly. At this pair continues to fall hard, then it is possible to short other pairs that will give you a little bit more momentum like the AUD/JPY pair, NZD/JPY pair, CAD/JPY pair, and so forth. This pair is a little congested and noisy, which makes quite a bit of sense considered both currencies are thought of as “safety currency.”
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This article was originally posted on FX Empire