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Christopher Lewis

The US dollar has rallied against the Japanese yen during the trading session on Monday to reach towards the ¥105 level. This is a large round number that will attract a lot of attention. That being said, there is the 200 day EMA above, and of course the psychology that could cause a bit of resistance. On the other hand, you can also make an argument the US dollar is oversold, and I think most people would agree with that sentiment. That might be part of what we are seeing here, the idea that perhaps market participants have gotten a bit ahead of ourselves when it comes to the idea of selling the greenback.

USD/JPY Video 02.02.21

All this being said, we should pay close attention to the 200 day EMA because I think it will lead where trading goes next. If we can get a break above the 200 day EMA, that could be a complete trend change for this currency pair, and then you could see a massive “buy-and-hold” type of opportunity. I do not see that being the case right away though, but it is certainly something worth paying attention to. To the downside, we could very easily find ourselves reaching towards the ¥104 level again, but it is worth noting that we did gap higher to kick off the weekend quite often that does mean something down the road.

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A lot of this is going to come down to the fact that perhaps stimulus will not be as big as once thought coming out of America, and that has to be factored into the Forex markets. With that in mind, I do believe that we have very choppy action just ahead of us.

For a look at all of today’s economic events, check out our economic calendar.

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