US dollar shows obvious struggles during the week against the Japanese yen

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Updated: May 12, 2018, 04:46 UTC

The US dollar tried to rally towards the ¥110 level again during the week but continues to struggle as we turned around to form a shooting star. This is a very ominous sign, although I don’t necessarily believe that it is the end of buying pressure. I think this shows that we are going to get a bit of a pullback, which could end up being a nice opportunity for those who are patient enough to take advantage of it.

The US dollar rallied significantly against the Japanese yen during the week, touching the ¥110 level again, but just as we had seen the previous week we ended up falling from there. By forming this shooting star for the 2^nd consecutive week, it suggests that we are due for a pullback. When I look around the Forex world, it appears that we are going to continue to see a bit of trouble in the US dollar, perhaps in reaction to being in an overbought condition. This can be seen in the EUR/USD, GBP/USD, AUD/USD, and USD/JPY markets.

I believe that the market is simply giving the greenback positivity arrest, I don’t think that something has changed longer term. I believe that if we can break above the top of the ¥110 level, that sends this market much higher, perhaps reaching towards the 112.50 level. Otherwise, if we pull back from here I think that we will find plenty of support near the ¥107.50 level. In general, I believe that the uptrend line will hold below there as well, so I think for the longer-term trader it’s a question of either picking up value or buying the breakout above ¥110 above. The market will favor short-term selling, but I believe in the longer-term uptrend.

USD/JPY Video 14.05.18

About the Author

Christopher Lewisauthor

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.