The US dollar has rallied against the Japanese yen during the trading session on Monday, reaching towards the ¥109.50 level. The ¥110 level offers a significant barrier that the market has been struggling to overcome, and the weekly chart has formed a couple of shooting stars in this area, showing the ¥110 level to be massive in its importance. This typically means that we will rollover and selloff, and I still think that is very possible. However, I recognize that if we break above the ¥110 level, especially on a daily close, that could send this market much higher and send the pair reaching towards the ¥112.50 region.
Ultimately, this is market that will be volatile, and of course highly sensitive to interest rate differentials and the bond markets. We’ve recently seen interest rates in America drop off a big, and that of course has sent this pair lower. However, on Monday it looks as if this is a rally based on a “risk off” attitude around the world. I believe that the market breaking above the ¥110 level will of course set up an entirely new dynamic in this market, with the ¥110 level starting offer significant resistance.
If we do start to break down, I recognize that the ¥107.50 level underneath is a very significant floor, as it was such a massive amount of resistance before the breakout above that level. I anticipate that we will continue to see a lot of volatility, and quite frankly I would wait for some type of impulsive move on the daily charts to get involved.
USD/JPY Video 15.05.18
This article was originally posted on FX Empire
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