The US dollar gapped lower against the Japanese yen, continuing the selling pressure that started on Friday, as traders continue to look to the overall “sell America trade”, and the potential “rate check” coming from the Fed on Friday.
USD/JPY
The US dollar gapped lower against the Japanese yen, continuing the brutality that we had seen late on Friday as word got out that the Federal Reserve Bank of New York asked for a rate check on this particular pair. That being said, some people are starting to read into that that the Federal Reserve and the Bank of Japan had both intervened to save the yen, at least in the short term. I find this interesting and I also find this as an excellent opportunity.
Most of the time you get something like this happening in the markets, you will see a massive turnaround for a couple of days and then the market goes back to doing what it did to begin with. With that being the case, I am watching the 200-day EMA quite closely with the 152 yen level being right there. I think that is an interesting spot, assuming that we even fall that far.
Technical Levels and Strategy
If we turned around and break above the highs of the day, then the 50-day EMA at the 156 yen level gets targeted, followed by the 159 yen level. Ultimately, this is a market that I think continues to be very noisy, very choppy, but it does pay you at the end of every day and I do believe that will be one of the things that people pay the most attention to over the longer term.
The US dollar itself is soft overall, I recognize that, and if we get a turnaround in the US dollar in general then that might just add a little bit more rocket fuel to this particular situation as well. So, I am not looking to short this pair; I am looking forward to see if we can get a little bit of stability and a bounce that I can take advantage of. I have made quite a bit just simply holding on to this position and I plan on doing more of the same if and when I get an opportunity. If we were to break down below the 200-day EMA, then we have to reset the whole situation, but as a general rule, I do not like paying swap so I probably won't short it regardless.
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