The US dollar initially rallied during the training session on Thursday as we tried to rally a bit. Having said that, the market has pulled back significantly to break down below the ¥138 level. The ¥138 level had caused a bit of support as late, and therefore you should pay close attention market in this general vicinity. Even if we do break down from here, I think it’s only a matter of time before the buyers jump in, as we have seen this area offer interest previously.
Even if we break down below the ¥137 level, then it’s likely that we could drop to the ¥136 level. The ¥136 level is an area that is also supported, as it has been very noisy. The area is quite impressive due to the noisy trading that we had seen over the course of several weeks. Because of this, I think it’s probably only a matter of time before the buyers jump in and try to push to the USD/JPY currency pair upside.
Alternately, if we break above the top of the candlestick for the trading session on Thursday, then it’s likely that we will eventually try to make that move to the ¥140 level, which is where we will eventually try to go given enough time. At this point, the market is likely to continue to be a “buy on the dips” scenario, and I think you need to pay close attention to any potential balance going forward. Even though the market has sold off quite drastically during the trading session, I think it’s very unlikely that we would see a major selloff anytime soon.
The shape of the candlestick is negative, so we might get a little bit of a sense of negativity in the short term, but I think that’s only going to end up being an opportunity. However, as the US dollar got pummeled as a consequence of the ECB raising interest rates much larger than anticipated, so the US dollar got sold off in general. Whether or not this continues to be the case, then it’s likely that we would eventually find some type of value that people will be interested in. The Japanese is considered to be a bit of a safety currency, but then again, so is the US dollar.
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