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Christopher Lewis
USD/JPY

The US dollar got pummeled against the Japanese yen during trading on Wednesday, as we reached towards the ¥106.50 level. The ¥106 level underneath there has formed a bit of a short-term “double bottom”, so that is an area that I think will cause some issues. If we were to break down below that level, then the market would go racing to much lower prices. However, we have been grinding back and forth for so long that one would have to think that there are range bound traders waiting to buy this pair just underneath. To the upside, the see the same problem, namely the ¥107.50 level.

USD/JPY Video 16.07.20

The 50 day EMA sits at the ¥107.50 level as well, so that is something worth paying attention to. If we do rally towards that area, then I think it is only a matter of time before sellers come back in. Above there, we have the 200 day EMA which is at roughly ¥108, and therefore I think it is likely that we will continue to see this market selloff in that general vicinity as well.

It is not until we break above the 200 day EMA that I think the market can go higher, perhaps reaching towards the ¥110 level. That of course would be a very bullish sign, but I do not see that happening right now unless there some type of major shift in attitude. After all, the Japanese yen is also a safety currency, just like the US dollar is so this pair tends to move a little bit erratic at times, but right now it seems the only thing people are paying attention to is selling the US dollar.

For a look at all of today’s economic events, check out our economic calendar.

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