The US Dollar falls hard against the Japanese Yen after a meeting between the US and Japan on a trade deficit. The USD/JPY is projected to continue falling in today’s session with the yen trading at 110.65 yen per one dollar. The latest news indicates that JPY has fallen hard against most other currencies, highlighting that these currency pairs are overbought which could result in a reversal of a trend.
The US dollar slumped in Asian trading on Thursday after a meeting between the U.S. and Japan on trade deficits failed to make progress, with investors now worrying the U.S.-North Korea nuclear standoff could lead to a global recession.
US Dollar vs Japanese Yen Technical Analysis
The USD/JPY has broken out of its falling wedge and looks set for another run, aiming for the 110-120 range in the coming weeks as it has been confined to this range @110 within the last 6 months or so. The US Dollar seems to be trading at a higher price than it should be for what is actually happening in the current economy, and with such high forex volatility, we are not surprised that it is coming under pressure.
If the US Dollar does continue the downward trend it will most likely be overbought, and a correction may be expected. It is also worth noting that although the USD/JPY is trading at a high level, it has been overbought by more than 65% since early October. This means that there could be some additional downside pressure coming from above as it looks set to continue its fall.
US Dollar index
The USD/JPY continues to make fresh advances in the coming hours. The pair is trading at the highs of the day and shows no sign of relenting. The index seems to be trading near the top of its rising wedge formation, and if it can hold this level it is unlikely that it will break out of the falling wedge as there is no real support level for a breakout beyond here. We see this index forming a double top at around 110-120 as resistance but with such a high Fibonacci Retracement point, we are not surprised that such a move will be met with resistance rather than support should it reach these levels again.
USD/JPY Price Forecast: Key Support and Resistance Levels
The USD/JPY is approaching the key support level of 110.06, a break below this level could put further pressure on the pair and a further fall towards 107 could be expected. The USD/JPY is trading within a strong downtrend, a break below the key support of 110.06 will pave the way for more declines towards 107.00 – 104.60 in extension over the next few days. A rebound from any of these supports will invalidate this bearish view as we will see a move back above 111, in case of any upside break we can see a test to our next resistances at 111.
As we approach the weekend, it will be important to keep an eye on the pair’s reaction to the latest news that impacts the pair overall. For example, if there is any movement on North Korea, will this have any effect on Asian markets. We also need to look at how North Korea’s military might respond as they are well-known for not sharing or cooperating with each other, in the past creating a chain reaction of events that may have a spillover effect across all markets. The USD/JPY is trading within a growing triangle pattern, this is thought to be a reversal point for traders however it should be noted that such patterns are not always reliable in anticipating specific directions for price.