The US dollar fell against the Japanese yen to kick off Tuesday, but quite frankly we find quite a bit of noise below near the ¥111 level that could turn things around and have the buyers jumping back in. The market of course continues to react to the trade war fears and the like, so this could be a bit of “Ground Zero” for reaction to the headlines. I believe it is only a matter of time before we turn around though, probably based upon some type of headline coming out.
The pair does tend to move in reaction to risk appetite as well, so keep that in mind. It makes a lot of sense that this could be where much of the trading activity is found over the next 24 hours, but I would say that if we break down below the ¥111 level, it’s very likely that we go down to the ¥110.50 level, and then possibly the ¥110 level after that. To the upside, the ¥112 level looks to be resistive, so at this point I’m simply looking for return to the recent highs, not necessarily a major move to the upside, at least not until we get more of a resolution to the trade tensions between China and the United States. There doesn’t seem to be high hopes for that in the short run, so I think we are going to continue to see choppy and range bound trading, which of course is typical for this time of year anyway.