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Christopher Lewis
USD/JPY

The US dollar has gone a bit higher against the Japanese yen during the trading session on Tuesday, as the market continues to see an attempted defense of the ¥105 level. This obviously is a large, round, psychologically significant figure and it does make a certain amount of sense that we would continue to see some volatility in this area. That being said, when you look at the longer-term trend you can clearly see that the 50 day EMA has been offering a bit of dynamic resistance, extending to the 200 day EMA. In other words, we are in a longer term downtrend and therefore need to respect that.

USD/JPY Video 14.10.20

On short-term rallies that show signs of exhaustion I am more than willing to jump in and fade this market, it simply seems to be one that is destined to grind much lower. The most recent low was lower than the one before it, and it now looks as though if we have made a lower high as well. In other words, everything looks right for sellers to continue to push this market lower.

With the idea of another fiscal package coming out the United States, it does make a certain amount of sense that this pair should continue to go lower. Furthermore, the Japanese bond market gives more of a return than the US bond market, something that I have never been able to say before. This of course drives more money into the yen, as the yen is needed to buy these bonds with all of that, it looks like we continue to you short-term charts to get short-term selling positions going.

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

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