USD/JPY Price Forecast – US Dollar Continues Grind Against Yen
The US dollar has broken down again during the course of the week, breaking below the ¥103 level one point before stabilizing just above it. As Congress continues to talk about stimulus, there is hope that we could see a certain amount of relief for the American public over the weekend. That being the case, it does tend to weaken the US dollar and therefore it makes sense that we would go lower. Just above, the ¥104 level continues to be a major barrier as well, so ultimately, I think what we are looking at is an opportunity to fade rallies more than anything else.
USD/JPY Video 21.12.20
To the downside, the ¥102 level is more than likely going to be supportive, and I think it makes a nice target for the longer term. We are heading into the Christmas week though, and that of course will have its own influence on the market as we have such liquidity problems at that point. All things being equal, I think what we are seeing here is the market trying to find its floor, but we have some time to go before I think we get there. Furthermore, I would not read too much in the next candle, civil because it will only be about three days’ worth of real trading, and low level volume at that. As we head into the holidays, this is a pair that is either trying to find the bottom or is going to fall much further.
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It is worth noting that almost everybody is bearish on the US dollar at the same time, and that is almost always a contrarian signal given enough time. It will be interesting to see how January shakes out but the next week or two could be rather choppy.
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