- The US dollar initially rallied against the Japanese yen during the trading session on Tuesday but has given back most of the gains.
- By doing so, this suggests that we are in fact going to continue to see a lot of hesitation.
- I do think that we are still in the midst of trying to form some type of supportive of basing pattern, especially as the ¥140 level seems to be a bit of an epicenter for support.
- Area that I think will remember the previous attempt to break down the road, so I do think that it is an epicenter of importance.
Ultimately, this is a market that will continue to pay close attention to the overall tariff situation, which Japan is a major player when it comes to global trade. The Americans and the Japanese are getting fairly close to some type of deal from what we are hearing in the news, so that could have a major influence on what happens next. All things being equal, if we were to break down below the ¥140 level, that would probably end up being a very negative turn of events.
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Technical Analysis
The technical analysis for this USD/JPY pair is rather negative, but you can also make an argument that the ¥140 level is so supportive that you at least have to start to look for the idea of forming a basing pattern, which is the beginning of turning this whole thing around. If we were to break higher, there are multiple areas that I would be concerned about if I were long, starting with the ¥144 level, followed by the 50 Day EMA near the ¥146.75.
I do believe that this will probably end up being a very noisy market that is choppy and difficult, so be aware of the fact that we could see some issues hanging onto positions for a lot of traders. Position sizing will be crucial as usual, and therefore you need to be aware of your size as well.
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