The US dollar has chopped around against the Japanese yen during trading on Monday, hanging about the 106.50 level. The market continues to be very noisy, and I believe that will remain the case for the next couple of sessions. The 106.50 level is an area that has previously been resistive, so it would make sense to offer support here, but ultimately, I think it’s only a matter of time before the market makes its next move. The breaking of 106 to the downside would be negative, but I think that ultimately there are buyers coming into this market based upon value. The pair had been far too oversold, and it’s likely that were going to go to the 107.50 level next. That area should be resistance though, because it was such significant support.
Ultimately, if we break above that level I think that the market would be free to go towards the 110 handle, an area that has been important more than once. On the other hand, if we were to break down to the 105 handle, we would face significant support. Breaking below that level would be very negative, perhaps sending this market down to 100 next. I think there’s going to be a lot of noise regardless of what happens next, so keep that in mind and make sure your trading positions are relatively small as there is a lot of danger in this market.
Written by FX Empire