USD/JPY Price Forecast – the US dollar rallies but gives up early gains

The US dollar initially fell during the trading session on Tuesday as the Americans labeled the Chinese “currency manipulators.” At this point, the market then turned right back around to reach towards the ¥107 level above, which is a large, round, psychologically significant figure. This is also an area that has offered support previously, so now it makes sense that it would offer resistance. Overall though, the market has given the longer-term participants a bit of value for picking up the Japanese yen.

USD/JPY Video 07.08.19

As we had broken down below the 61.8% Fibonacci retracement level rather decidedly, it is likely that we will go down towards the 100% Fibonacci retracement level. The ¥105 level is massive support from a psychological standpoint, and of course the 100% Fibonacci retracement level being right there. At this point, I do think that we will test that area but probably find some type of short-term bounce. Given enough time though, it would not be surprising that the market would break down below there reaching towards the ¥102.50 level. I believe that there will be a significant amount of support there as well. Ultimately though, keep in mind that the market is one that measures risk appetite, meaning that the Japanese yen will strengthen if traders are concerned about various things. Right now, there’s a lot to be worried about, so I do think that it’s only a matter time before rallies get sold, just as we have started to see during the Tuesday session.

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