USD/JPY Price Forecast – US Dollar Breaks Support Against YenThe US dollar broke down below the short-term support level against the Japanese yen at the ¥106.50 level on Wednesday, showing signs of weakness again. Ultimately, this is a market that measures risk appetite, and rises and falls with it.
The US dollar has broken down against the Japanese yen during the trading session on Wednesday, slicing through the ¥106.50 level. That of course is an extremely negative sign when it comes to the risk appetite of traders around the world, and it now looks as if we are ready to go looking towards the ¥105 level underneath, an area that I have been talking about for some time. The ¥107 level now offers a significant amount of resistance above, but as we are roughly in the middle of that area, it makes sense that we will have to look towards shorter-term charts the place trades now.
USD/JPY Video 07.05.20
Short-term rallies that show signs of exhaustion can be used as trade signals, especially near the ¥106.50 level. Pay attention to the S&P 500, because quite often it will have an effect on where this trades as well. That is not always the case, but typically this will move along with other risk appetite based assets as the Japanese yen is considered to be a safety currency. Quite frankly, I do not have a sense of where I would be a buyer of this pair, because it would take such a massive shift in risk appetite and sentiment to make it worthwhile. If I am looking to short the Japanese yen, I will not buy this pair, but I would buy other ones such as AUD/JPY, etc. This is because those currencies have been a bit more resilient against the US dollar over the longer term, so they will more than likely bounce a bit more. Nonetheless, this is a bearish market.