USD/JPY Price Forecast – US Dollar Continues to Trade On Fear

The US dollar has fallen against the Japanese yen during trading on Wednesday, as we are now below the ¥105 level again. Ultimately, this is a market that continues to dance around the gap that had formed. The ¥104.20 level is an area that has offered slight support but it’s likely that we break down below there if the fiscal stimulus isn’t strong enough to appease market participants. Ultimately, even if we do rally from here, I suspect that there is a significant amount of resistance near the ¥107.50 level where even more selling will come into play. Because of this, it’s simply a matter of looking for “value” in the Japanese yen.

USD/JPY Video 12.03.20

If the market breaks down below the ¥104 level, then it opens up the door to a move down towards the ¥101.50 level again. All things being equal, this looks a lot like 2008, but it is probably a bit much to ask to make that connection as the issues are completely different. While that crisis was a financial crisis, the reality is that this one is about health and the movement of people around the world. Ultimately, the pair is a measure of risk appetite, so therefore it’s difficult to imagine a scenario where the market suddenly takes out to the upside and keeps those gains. Quite frankly, I think that there will be plenty of opportunities to sell from higher levels if Steve Mnuchin comes out with some type of fiscal plan that the markets like. After all, fiscal stimulus isn’t going to help public gatherings continue.