The US dollar initially fell a bit during the week, but then turned around to break above the ¥105 level for the week. At this point, the market is likely to see continued upward pressure, at least in the short term. I believe that the ¥106 level above continues offer resistance, so fading that area makes quite a bit of sense. Ultimately, I do think that this pair breaks down not necessarily because I am bearish on the US dollar, just that I recognize that the Japanese yen is considered to be the ultimate “safety currency”, and therefore this is the one place that I am looking to short the greenback. If the greenback starts to sell off in general, it is likely that will only exacerbate this move as well.
USD/JPY Video 28.09.20
If you look above the ¥106 level, there are several wicks that suggest selling pressure. At this point, I am looking for an opportunity to short this pair closer to the ¥106 level, and then possibly even the ¥107 level. Longer-term, I anticipate that the market is going to go looking towards the ¥104 level, possibly even the ¥102 level. If fear enters the market hand over fist again, it is likely that this pair will sell off the less it is all about the US dollar, then it will grind higher. Nonetheless, the US dollar will gain less against the Japanese yen then it will other currency such as the Australian dollar, New Zealand dollar, Swedish krona, etc.
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This article was originally posted on FX Empire