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Christopher Lewis

The US dollar has shot higher during the trading session on Wednesday but has given back the gains as we approached the 50 day EMA. Ultimately, the 50 day EMA has been an area that continues to show a lot of resistance, extending all the way to the 200 day EMA. Furthermore, there is also a downtrend line above that could be an issue as well so pay close attention to both of those areas for potential selling opportunities. The shape of the candlestick is somewhat bullish, and it is worth noting that the last couple of lows have gotten higher, but we are still very much in a longer term downtrend.

USD/JPY Video 03.12.20

All things being equal, I think that we are rallying due to the fact that the market is starting to see more of a “risk on” type of move. If that is going to be the case, then we probably could return to the previous “risk appetite sentiment indicator” that this pair tends to be. However, the Federal Reserve is likely to continue the loosening of monetary policy and possibly even be joined by Congress with stimulus, and therefore it should drive down the value of the US dollar overall.

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Granted, this is a very messy area that we are looking at the time, so it might be best to simply wait for the market to make its longer-term decision before putting a lot of money to work. As things stand right now though, if I were forced to trade this pair it would be to the short side every time it rallies and show signs of exhaustion.

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

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