By: Mike Kulej
The US Dollar has been suffering recently, falling against just about every currency to a point that the Dollar Index is only a whisper away from an all time low. Even the Japanese Yen is getting stronger in relation to the USD.
In mid March, the USD-JPY fell to a lowest level ever at 76.12. After that, we had a joint intervention by central banks of the G7 group, which pushed this pair to 85.52. That rally took out previous minor highs, seemingly breaking the long term down trend.
Under this scenario, the current drop to 81.03 could be seen as a correction within the emerging new uptrend. In spite of the large pull back, the ADX indicator is still moving down, which supports the notion that this is just a pull back. However, for that to be true, the price must reverse soon.
The question is where? At present, the USD-JPY is entering an area full of possible support levels. On a daily chart, there are two minor lows between 80.00 and 81.00. In addition, the 50% Fibonacci retracement is also located in that area. Moreover, let us not forget that this also could be an intervention level, where the Japanese Yen is deemed too strong again. If this pair is to turn bullish once more, chances are high it will happen very soon.