US Dollar vs Japanese Yen Weekly Technical Analysis
The US dollar has plunged against the Japanese yen during the trading week, breaking down below the 50-Week EMA. By doing so, the market then found the ¥132 level to be supported, but at this point it looks like we may have further downside. The main reason I say this is that interest rates are crashing everywhere, and that’s essentially what has worked against the pair as the Japanese yen gets a bit of a reprieve every time the market sees lower interest rates.
That being said, if interest rates continue to be noisy and eventually rise again, that could send this pair higher. Furthermore, you can keep an eye on the Federal Reserve next week, as it could give you a little bit of noise during the interest rate announcement. A lot of it will come down to not only the announcement, but whatever it is that Powell says in his speech. With this being the case, I think you’ve got a situation where market players will have to decide what it is Jerome Powell thinks he’s doing going forward. Expect an extreme amount of volatility, and therefore you need to keep a very reasonable position size on as confusion will continue to reign.
The 50% Fibonacci retracement level is marked on the chart, where we had bounced from previously, and I think it still holds unless of course we get some type of complete turnaround by the Federal Reserve. As things stand right now, it looks like the Federal Reserve still has to raise interest rates, due to the fact that inflation is still rather hot. Either way, keep your position size reasonable and buckle up.
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