USD/JPY Price Forecast – US dollar fallsWith the Federal Reserve becoming much more dovish during the trading session on Wednesday, it’s not a huge surprise that the dollar fell against the Japanese yen. At this point, the question is how far can it go?
The US dollar has fallen pretty significantly against the Japanese yen, breaking through the 61.8% Fibonacci retracement of the larger move that sent the market as high as ¥111 or so in the past. That being the case, it does look like we probably have more downside as the Federal Reserve has become decidedly bearish. In those situations typically the Japanese yen strengthens, but there is the conflicting “risk on” attitude out there in the stock market so this isn’t necessarily going to be the easiest move to hang onto.
USD/JPY Video 21.06.19
That being said, it’s very likely that we will see this market try to reach towards the ¥180 level, where I would expect to see some selling pressure. Ultimately though, now that we have broken through the 61.8% Fibonacci retracement level, if we can close below there on the daily chart it’s very likely that we go looking towards the ¥105 level below which is the next major support handle.
The alternate scenario is that we somehow turn around and break above the ¥108.75 level, which would send this market much higher, to at least the ¥109.70 level. That doesn’t seem to be very likely now that we’ve seen a couple of very bearish candle sticks form, but you always have to keep both sides of the equation in the back of your mind. Ultimately, it’s very likely that this pair continues to be rocky but negative overall and therefore you should be looking for value to the downside every time it rallies a bit too much.
Please let us know what you think in the comments below