USD/JPY Price Forecast – US dollar falls against yenThe US dollar fell against the Japanese yen during trading on Wednesday as several headlines came across the wires that got people nervous in general. The Japanese yen is the ultimate “safety currency”, so it makes sense that we saw this type of reaction.
James Bullard suggested that a yield curve inversion would kick off another recession during the day, and even though this is well known to most Wall Street strategists, this seemed to have caused some type of weird panic in the market. Beyond that, the Mexicans have stated that there is a high likelihood of a deal between the United States and Canada, so somehow that tank the stock market. I think what we have here is another case of “bots gone wild”, meaning that machines are trading the headlines and people are all but absent. Because of that, I think we are going to continue to see erratic moves like this.
However, looking at the chart I see there is a significant amount of support near the ¥111.10 level, that extends down to the round figure at the ¥110 level. Because of this, I’m looking for an opportunity to pick up this pair “on the cheap” and think that we will see a turnaround eventually. This is a market that continues to be very noisy in general, but that makes sense as we have so much in the way of trade disputes and of course emerging market problems. The US dollar has enjoyed a lot of strength as of late, and I think it will again. However, the Japanese yen is probably the one currency that will outperform it in a negative environment. This pullback should be thought of as a nice buying opportunity, let the market settle down and then take advantage of it.