The US dollar has rallied initially during the trading week but gave back the gains as we continue to see a lot of concerns about geopolitics, inflation, and of course a slowing down of the overall economy. With this being said, the market is certainly threatening something bigger, but right now we have not seen that play out. Furthermore, I would also suggest that even though the Japanese yen is considered to be a safety currency, so is the US dollar so it is likely that we will not see a major meltdown here.
USD/JPY Video 07.03.22
If we do break down, then the ¥113.50 level will be the next support level I look towards, followed by the ¥112.50 level. To the upside, it looks as if the ¥116 level is going to continue to be a little bit of a barrier, but interest rate differential alone could drive this pair above there given enough time. The only thing we need at this point is a little bit of stability to get this longer-term uptrend going, but as you can see this pair does tend to be very choppy for weeks on end, and then will suddenly pick up an impulsive bid.
My favorite thing to use this chart 4 is an indicator of Japanese yen strength or weakness and apply that the other currency pairs tend to move much quicker. If you do see this pair pullback, it is very likely that other pairs such as GBP/JPY and NZD/JPY are falling even quicker.
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This article was originally posted on FX Empire
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