The US dollar has done very little during the trading session on Friday as we got a bit too close to the 114 level. At that area, we see significant resistance all the way to the 115 handle, so don’t be surprised at all if we turn around and roll over. The underneath area looks very strong though, with a nice uptrend line that is the bottom of the channel that we been in, and of course the 200 day exponential moving average. If we do pull back to that area, I think a supportive candle or a bounce could be bought. However, if we were to turn around and break below the 200 day exponential moving average, we could go much lower, perhaps reaching towards the 110 level, maybe even the 108 level after that.
USD/JPY Video 17.12.18
Having said all of that, it is the end of the year and most currency traders aren’t putting fresh money to work. So what this means is that we will probably continue to bang around in this area, in a relatively tight consolidation area. Ultimately, this is probably going to be a decision that’s made in 2019, perhaps the second week of January. Between now and then, I would anticipate a lot of noise more than anything else. However, if we break down or break out to the upside, then we could have a significant move coming. Keep in mind that the 115 level above has been massive resistance several times on longer-term charts. For what it’s worth, a lot of analyst on Wall Street expect the Japanese yen to strengthen next year.