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Christopher Lewis
USD/JPY

The US dollar has gone back and forth during the trading sessions that make up the week against the Japanese yen, as the ¥105 level continues to be resistance, but at the same time the ¥104 level has been rather supportive. However, when you look at the longer-term chart you can see that we are clearly in a downtrend and if we were to break down below the ¥104 level, we will probably open up the trapdoor to reach down towards the ¥102 level. That is an area that has been massive support, before we shot straight back up in the air. That being said, it now looks as if that area needs to be retested.

USD/JPY Video 02.11.20

 

To the upside, if we were to break above the ¥105 level, then the market will probably test the ¥106 level which is even more resistive. However, the weekly candlestick does tell me that this has started to become a bit of a “binary trade”, meaning that once we break out of this 100 point range then more money will flow into the market and push it in one direction or the other.

Keep in mind that this pair is highly sensitive to risk appetite, and quite frankly right now there are a lot of things going on that could cause nothing short of chaos. For example, we have the stimulus situation in the United States which should continue to work against the US dollar when it comes to safety currencies such as the Guinean perhaps the Swiss franc, but it also should be kept in the back of your mind that we have the US presidential election on Tuesday. Furthermore, we have coronavirus issues and Europe closing itself down. Most of this favors the downside.

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

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