USD/JPY Price Forecast – US dollar still look soft

Christopher Lewis
The US dollar continues to look soft against the Japanese yen, as we have broken through a major support level and now are simply drifting in general.

The US dollar has rallied slightly early during the trading session on Monday, but when taken in concert with the overall trend, there’s not much to look at here. There should continue to be resistance above at the previous 61.8% Fibonacci retracement level which is essentially the top of the candle stick from the previous session. A break above there opens the door to the ¥108.70 level, which is also resistance. However, I have found over the years that typically if the 61.8% Fibonacci retracement level gets broken, and then retested like it has, quite often you will wipe out the entire move.

USD/JPY Video 25.06.19

Looking at this chart, it would make sense to see this pair drift down towards the ¥105 level, especially considering we are waiting on the United States and China to talk at G 20, perhaps making some type of progress. If they don’t, that will continue to weigh upon this market, and at this point it’s still my primary expectation as they have yet to make any significant progress. If that’s going to be the case then it makes sense that we would continue to see the Japanese yen favored.

Not only would that weigh upon the market, but we also have to look at the Federal Reserve and the fact that it is stepping away from a hawkish stance will also weigh upon the US dollar and favor the Japanese yen. Out of all of the major currency pairs, this is by far one of the most highly influenced by interest rate differentials, especially in the ZN/10 year contracts. Were in a downtrend, there’s no reason to fight it.

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This article was originally posted on FX Empire

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