The US dollar fell against the Japanese yen during most of the session on Monday, as we continue the downward pressure. Now that we have cleared the 111.50 level, I believe that the market is going to continue to go down towards the bottom of the overall consolidation area, that we have been in for several months, if and extends down to the 108 handle. This will be especially true as the US Congress cannot seem to pass significant tax bills. Ultimately, it’s not until we break above the 112 level on a daily close that I would be willing to buy now that we have made this breakdown. That is unless of course we formed some type of supportive action near the 108 handle, which has been so important and supportive in the past. I believe that the market will turn around is the US Congress can do its job finally.
In the meantime, I think it’s a “sell the rallies” situation, as we continue to see the US dollar get beaten up around the world. The Japanese yen is of course considered to be a safety currency anyway, and I think the given enough time we could see some type of safety move anyway. On the hourly chart, we are starting to form a shooting star at the 111.25 level, which was previously supportive, and should now be resistive. A breakdown to the 110 level is probably the next move, and then a move down below the 110 level almost certainly opens the door to the 108 handle. In general, I think there will continue to be a lot of volatility, but a general downward pressure seems to be the case in a market that has certainly been very choppy.
Written by FX Empire