The US dollar bounced a bit during the trading session on Thursday near the ¥110.50 level. The market looks as if it is trying to find some type of bottom here, but obviously we will have some work to do. I believe that the ¥110 level underneath there is even more supportive.
The US dollar has initially pulled back against the Japanese yen again during the day on Thursday but found a bit of support near the ¥110.50 level. This is an area that has been supportive in the past, so it makes sense that we got this bounce. However, it does look like we are struggling a bit at this point, and that we are likely to see this market be a bit noisy and difficult. Longer-term, I do think that we bounce due to the fundamental differences between the central bank policies, but right now we obviously have a bit of a run to the Japanese yen, perhaps in a bit of a safety move due to the currency war.
When I look at the chart, I realize we are more than likely going to continue to see a little bit of a pullback, but I do believe that the ¥110 level will attract a lot of attention. Until then, I don’t expect much out of this market, other than a bit of back and forth choppiness. Short-term scalpers might like this pair currently, but I think longer-term traders are going to struggle. However, if we were to somehow break above the ¥111.50 level, then it would be very bullish. The ¥110 level underneath being broken to the downside would be very negative and could send this market much lower. In general though, I think that probably won’t happen.
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.