USD/JPY Price Forecast – US Dollar Breaks Support

The US dollar broke through support at the ¥107 level during European trading on Tuesday, reaching down towards the ¥106.50 level. Rallies at this point will probably be sold into unless of course the market basically melts down. It is a market that clearly is looking as if it is trying to figure out what to do next, and of course this may simply be a US dollar story as it got hammered early in trading. That being said though, the Japanese yen is also a safety currency, so that could cause a bit of noise here. Regardless, it is hard to imagine that the market has not noticed that a breakdown below the ¥107 level has an extremely negative look to it.

USD/JPY Video 29.04.20

To the downside I suspect that this market will probably go to the ¥105 level as it is a significant support level. All things being equal, this is a simple breakdown through a major support and if you look at the chart from a purely technical analysis stance, it is a move that you would expect. However, it is also worth noting that the market is possibly looking at the Japanese yen for safety, which would make sense in the environment that we find ourselves in.

Ultimately, this is a market that has been grinding and making “lower highs”, so it makes sense that we eventually shot lower. Rallies at this point should be faded, unless of course we break above the ¥107.25 level, on a daily close. Until then this market looks a bit suspicious.