The US dollar has gone back and forth during the trading session again on the Monday as we continue to see a lot of noise. This is a market that of course is highly sensitive to risk appetite in general, so obviously it will be all over the place. Headlines continue to throw the USD/JPY pair back and forth, as the Japanese yen is certainly considered to be a “safety currency.” All things being equal, I believe that the market will eventually have to make a decision, but right now it looks like we are stuck between two major technical levels.
All things being equal I believe that the 200 day EMA above is massive resistance, currently trading at the ¥108.75 level. If we were to break above there it would obviously be a very bullish sign but I suspect that any signs of exhaustion in that area will be jumped on. Breaking above there should send the market looking towards the 61.8% Fibonacci retracement level, and where the market had broken down very massively, and therefore you would expect to see a lot of order flow in that area.
To the downside, the 50 day EMA painted in red should offer a bit of support, and I think at this point there should be a lot of support between there and the ¥107 level. At this point, the market looks very likely to be very confused between these two massive moving averages, and therefore it’s likely that the push and pull continues. Beyond that, this pair will react to headlines coming out at any moment, and of course Tweets. With that being the case, this is a market that I think is trying to figure out where to go next and should be looked at with suspicion. It’s not until we get a daily close above or below one of these two moving averages that we can put serious money in this pair.
Quite frankly, this is a market that I don’t like right now, as there are just simply a large amount of issues around the world that can break in either direction, so with that in mind it’s likely that we have very little to trade here other than in the short term back and forth type of action that short-term traders may like to take advantage of.\