The US dollar has drifted slightly lower against the Japanese yen during the trading session on Monday, as we continue to see a bit of concerned from traders around the world. I think that this pair is going to be very choppy, but I also recognize that there is a lot of support underneath. The 108.50 level is the beginning of support down to the 107.50 level, and therefore I think that the market is likely to find buyers overall. That’s not to say that is can be in easy trade, but I think that if you jump into this market slowly, you should be able to find some type of value.
The market breaking down below the 107.50 level would be very negative, and I think that could drop this market down to the 105 handle next. That of course is a large, round, psychologically significant number, and will attract a lot of attention. This would be at the same time as a selloff in the general markets overall, such as stock markets. At this point though, I believe that a lot of the negativity has already been priced into the market, so I anticipate that this pair will probably try to rally. That’s not to say that is can be easy to do, but I think eventually that’s what happens. I have a target of 110 over the next several sessions, but I would look at the 100 pips below as a “squishy zone” of support, and therefore would be an area where I would give the trade little bit of wiggle room.
Written by FX Empire