- The US dollar has gone back and forth during the course of the trading session here on Tuesday as we are hanging around the 200 Day EMA, but perhaps more importantly, we find ourselves in the middle of an overall consolidation range that has been like a pair of brick walls since the beginning of August.
All that being said, it’s important to recognize that both the 200 Day EMA and the 50 Day EMA indicators are flat, and it suggests that perhaps we are in a situation where the market is going to stay somewhat flat, as we have to make a bigger decision going forward. This makes sense, because both central banks look likely to be relatively soft at the moment, with the Federal Reserve cutting rates just a week ago. The question of course is whether or not risk appetite will come into the picture, because it can have a major influence on this pair.
Risk Appetite
The risk appetite out there is going to be major influence on where this goes, because despite the fact that the US dollar is a major safety currency, and of course we have the Japanese yen which is even “safer” than the US dollar. The ¥146 level below is a major support level, while the ¥149 level above is a major resistance barrier. We find ourselves in a 300 pip range and are basically dead set in the middle of it. In other words, this is a market that I think continues more of the same behavior that we have seen, and that brings up what I have been doing this pair.
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I have been buying each and every dip with a reasonably sized position, and collecting swaps for a few days, then closing out the position and waiting for the opportunity again. Obviously, this will go on forever, but once we break out of this 300 point range, we will have more clarity and therefore can put a little bit more money into the market for a longer-term move.
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