The US dollar initially tried to rally during the week but found trouble above and turned around to fall underneath the ¥109.70 level again. There is a zone of support that extends all the way down to the ¥109 level, so quite frankly it’s not surprising that we have stalled in this region. The question now is whether or not we can bounce? This pair does tend to move right along with the S&P 500 and other risk appetite structures. With that being the case, you’re going to have to watch stock markets which of course are closed on Monday in the United States so keep that in mind.
USD/JPY Video 27.05.19
If we break down below the ¥109 level, this opens up the door to the 188 level after that. If we break down below there, that probably falls under the auspices of some type of financial meltdown or break down in the stock markets. There is still a gap above that needs to be filled still, which is at the ¥1.1150 level. I do believe that eventually will try to get there but we need to avoid negative headlines in the meantime. Overall, this is probably a better short term type of environment than anything else. Longer-term traders will probably continue to be stymied and frustrated as there are so many different moving pieces out there that could move this market.
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This article was originally posted on FX Empire