The US dollar has gone back and forth during the trading session on Monday, which of course was a little bit skewed due to the fact that the United States was a way on the extended Independence Day holiday. At this point, the market continues to look at the ¥111 level with a little bit of hesitation, which makes sense considering that the market has shown quite a bit of resistance extending from this level to the ¥112 level. To the downside, the ¥110 level would be supportive as the 50 day EMA is reaching towards it.
USD/JPY Video 06.07.21
If we break down below the ¥110 level, that could open up quite a bit of selling pressure, extending all the way down to the ¥108 level, or perhaps even down to the 200 day EMA. I do believe at this point in time it is likely that we could see more momentum to the downside than upside, due to the fact that the resistance above has been so resilient over the last several years, and therefore I think it is going to take something rather drastic to break through there.
The one thing I think you can count on is a lot of choppy behavior, and a persistence to stay in this channel. Because of this, I do believe that the ¥110 level is a significant area that will define where this market goes over the next several weeks, if not the rest of the summer, so keep all of that in mind. The pair is highly sensitive to risk appetite, so pay close attention to other markets as well, as they can give you a little bit of a “heads up” as to where this market may go.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire