US Dollar Slumps Against Japanese Yen

The US dollar has fallen a bit against the Japanese yen as we continue to see a little bit of hesitation. We had formed a couple of shooting stars the previous couple of days, so it is not a huge surprise to see a pullback. Quite frankly, I think a pullback is probably necessary at this point, as there is a lot of confusion out there and of course both of these are considered to be safety currencies. In other words, we will probably go back and forth for a while, looking for some type of confirmation as to where the markets want to go.

USD/JPY Video 02.02.22

The market participants will continue to look at both of these currencies with favor, but it just depends on how fearful they truly are as to whether or not this market rises. Quite frankly, if we do have a little bit more of a “risk on move”, that could help this pair rally as the Japanese yen gets sold off in that scenario. If we do break down from here, then I anticipate that we could go looking towards the 50 day EMA underneath. After that, then we probably go looking towards the ¥113.50 level.

Technically, structure is changing a bit, so we have to keep an eye on any type of significant selloff. That being said, if we turn around and break above the top of the shooting stars that formed the short term top, that opens up a move back towards the ¥116.50 level which in turn opens up more of a “buy-and-hold” type of situation. Ultimately, I would expect more choppy and noisy behavior ahead.

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