The US dollar fell during the trading session on Thursday, reaching down towards the 106.50 level, which is an area that of course has been important more than once. It is looking to offer a bit of support though, and on the hourly chart we had formed a couple of hammers. I suspect we could get a bit of a bounce, as it would be a continuation of the massive move in that we had seen previously. I think that this market is trying to find a bit of a bottom longer term, so it’s likely that it will continue to chop around, but that’s nothing new for this pair.
The 105 level of course offers a lot of support, as we have seen more than once. I believe that if we were to break down to a fresh, new low, that would be catastrophic and send this pair down to the 100 level. However, I think what’s happened is a lot of people but the Japanese yen because of fears of a trade war. As those fears slide a bit, and that has the market looking towards more risky assets, and that keeps it away from the Japanese yen. I think that this pair will probably move right along with the stock markets, so it’s likely that you can watch the S&P 500 and this pair.
With the United States looking to raise interest rates and makes sense of the US dollar should eventually rally against the Japanese yen, as the interest rate differential will continue to widen over the longer term.
Written by FX Empire