The US dollar has fallen against the Japanese yen again on Monday in Christmas Eve trading. There is a significant amount of resistance just above that could continue to cause issues, as we just broke down through a major uptrend line in the uptrend channel. Ultimately, rallies in this pair will probably be faded, unless of course we were to break above the ¥112.50 level. At this point, I suspect that will be the play going forward, as most of my contemporaries believe that the Japanese yen will strengthen going into 2019.
USD/JPY Video 26.12.18
As far as a stretch lower is concerned, this makes sense if we have some type of selloff of risk appetite, it makes sense that the Japanese yen would strengthen. Beyond that, the Federal Reserve seems to be a bit confused then perhaps even softer than originally expected, so I think all of this confusion will turn this market back to the downside. When you look at the longer-term charts, the ¥114.50 level has been a massive resistance barrier, and we just failed there yet again. After all of the sideways choppiness and then the subsequent break down, it makes sense that the downtrend will continue from the longer-term charts. I suspect that we will go looking towards the ¥108 level next, although the ¥110 level will probably cause a little bit of a reaction. With all of the economic headwinds and uncertainty out there, it does make sense that the Japanese yen would strengthen a bit.
This article was originally posted on FX Empire
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