The US dollar has shown itself to be resilient as we have broken above the top of the previous weekly candlestick, but we are starting to struggle a bit on Friday, so this sets up the possibility of more choppiness, but with perhaps a bit of a push lower. Above, I see the ¥107.50 level as a major target for the buyers but should also show a lot of selling pressure. I think choppiness is going to continue to be a major problem in this pair, as both central banks are very loose with monetary policy. After all, the Federal Reserve has been flooding the market with greenbacks but let us not forget that the Bank of Japan has been perpetually loose with its monetary policy since the late 80s.

USD/JPY Video 17.08.20

With that being said, this sets up as a very difficult market to have a longer-term positioning, at least not until we decide what we are going to focus on more than anything else. Right now, it looks as if the Federal Reserve is winning the argument due to the fact that we have been grinding lower over the longer term, but the turnaround over the last couple of weeks should not be ignored. Quite frankly, there are going to be easier ways to trade the US dollar, I do believe that eventually the sellers come back and push to the downside. A break down below the hammer that formed two weeks previously would be a major breach of support and could open up this market for much lower move.

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This article was originally posted on FX Empire

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