Tactics and Analysis, July 24, 2017 – Yen Picking Up Strength

The Yen continues to be sold against the U.S Dollar, which is making the Japanese currency stronger in the short term. The Federal Reserve may continue to be dovish on Wednesday. If the Nikkei continues to be cautious too, the Yen may continue to become stronger and see the U.S Dollar sold against the Yen.

Yen Short Term Trend Strong

The Yen has found itself a centerpiece for risk adverse traders in Japan again.

The U.S Dollar has been sold in mass against the Japanese currency since mid-July, and the Yen is testing important support as it grows stronger.

The Yen as of trading this morning is below the 111.00 ratio, and traders may be tempted to continue to try and ride the strength of currency lower with the belief its momentum will continue to break through support levels and ultimately test June values.

Bank of Japan and Federal Reserve

While the Bank of Japan wants a weak Yen, the recent emergence of a more cautious U.S Federal Reserve has had an adverse effect on the monetary policy from Japan.

The belief that the Federal Reserve will not raise its interest rate until late in 2017, or may even hold off on hiking rates until early 2018 has sparked weakness in the U.S Dollar.

Yen’s Trend and Potential via Caution

The Yen has a reputation for creating steady trends. While the recent strength must be taken seriously, traders must also be prepared for the risk of reversals. The Federal Reserve will issue an important monetary policy statement this Wednesday.

If the Yen were to weaken it could test the 112.00 level, but the risk of the Yen starting to test resistance appears to be less than its potential to get stronger against the U.S Dollar.

Traders should monitor the Nikkei Index which has gone into a cautious mode the past week. If Japanese equities persist in trading lower, the Yen may continue to get stronger.

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.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.