USD/JPY Price Forecast – US dollar struggles at trendline

The US dollar has struggled a bit during the trading session after initially looking positive against the Japanese yen for Wednesday. There is a major downtrend line on the daily charts near the 112.50 level, and this seems to be a major barrier to overcome that is going to take some time. The pullback isn’t necessarily a sell signal, I think it simply is an opportunity to start looking for value underneath. I think that there is plenty of support near the ¥111.50 level, and then of course the ¥111 level after that.

If we were to break down from here, I suspect that you will find plenty of value hunters every 50 pips or so, and quite frankly I’m not interested in shorting this market as the US dollar has started to soften against several currencies around the world. That typically is good for this pair, because it shows that people are looking for risk, and as risk appetite rises, so does this pair under normal circumstances. Beyond that, we have the interest rate differential which is only going to widen between these two currencies, offering the possibility of a carry trade situation later down the road.

However, keep in mind that this pair can have sudden pullbacks based upon negative headlines, which of course we get plenty of these days. This is why I think you should risk more than 50 pips on any particular trade in this market and keep it the short-term moves. If we can close above the ¥113 level on the daily chart, that may change things, but until that expect choppiness.

USD/JPY Video 20.09.18