The US dollar initially tried to rally against the Japanese yen on Monday, but then rolled over at the 110.75 level. We reach back towards the 110.50 level where we started to see a bit of support, but I think that the support runs all the way down to the 110 handle. The 24-hour exponential moving average continues to offer a bit of resistance, so I think that the market might be choppy, and it could be difficult to deal with. I think that the market will retain choppiness, as we should figure out what’s going on with the Federal Reserve, and of course interest rates.
The alternate scenario
The alternate scenario of course is that we finally make a decision. I don’t think that the market is ready to do that though, so I think that we will go sideways. If we can break above the 110.85 level, I think the market will continue to go higher. Alternately, if we break down below the 110 handle, the market probably goes looking for the 109-level underneath. I think it’s going to be very difficult, but the market will eventually make its decision, but I see a lot of much easier trading in other currency pairs when it comes to the US dollar. I don’t think that this market is one that I’m going to be involved in, at least until we make some type of larger and longer term impulsive type of move. At that point, I am willing to put money to work, but currently I believe it’s probably best to be on the sidelines.
Written by FX Empire