The US dollar has been relatively quiet against the Japanese yen during trading on Thursday, as we have formed a bit of an inside bar. It is inside a hammer which suggests that the market wants to go higher, but obviously we will have to wait for the jobs number to get the true momentum that we may be looking for. Ultimately, it does look as if the 61.8% Fibonacci retracement level is trying to hold as support, as the US dollar weakens against most other currencies. While that seems a little bit counterintuitive, keep in mind that this pair is highly sensitive to risk appetite so therefore it makes quite a bit of sense that we see it rally if the stock markets rally as well, which can be due to Federal Reserve monetary policy easing.
USD/JPY Video 05.07.19
Ultimately, it looks as if we can break above the hammer from Wednesday. If that does in fact happen, then it opens up the possibility of perhaps going to the ¥108.50 level in the short term, which has been significant resistance. I think at that point will probably need to fight the 50 day EMA as well. The alternate scenario is a break down below the hammer from the trading session on Wednesday, which shows a breach of support. If that happens, it’s very likely that we go looking towards the ¥170 level, followed by the ¥105 level which would be a complete wipeout of the move higher that we had previously seen.
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This article was originally posted on FX Empire