Tactics and Analysis, August 1, 2017 – Yen Strength and U.S. Dollar Weakness

The Yen has continued to gain strength against the U.S Dollar and is testing important support. The Yen has been helped by the weak U.S Dollar and economic reports that continue to highlight U.S inflation is not matching the U.S Federal Reserve’s targets. The U.S Dollar may continue to be sold against the Yen in the short-term.

Yen Testing Important Support

The Yen continues to test important support after gaining against the U.S Dollar again on Monday.

The Yen is hovering over the 110.00 level and is within striking distance of potentially trading below the critical barrier.

The Yen tends to trend and the recent weakness of the U.S Dollar against other major currencies has helped created the strength in the Japanese currency.

Mid-Term is a Clue for Yen

A look at a mid-term chart shows the capability of continuing to see the U.S Dollar sold against Yen.

While the Yen lost ground against the U.S Dollar from mid- June until mid-July, the Yen was trading within realms near the 109.00 level in early June. If current sentiment continues to foster a weaker U.S Dollar the Yen may test this juncture again.

Yen Could Continue to Get Stronger

Risk appetite showed signs of life via Japanese equities this morning, but the gains on the Nikkei and Topix remain subdued. If equity markets in Japan remain cautious this will serve as an additional clue for more potential Yen strength against the U.S Dollar.

Trading in the Yen will continue to see a test of short term reversals certainly. However, the Yen may continue to trend towards stronger values. If inflation data remains weak from the States it could help the Yen too.

In the short term, we believe the Yen may be positive. Mid-term and Long-term we are unbiased.

Yaron Mazor is a senior analyst at SuperTraderTV.

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