Hey, all! Remember that range support that we were watching last week? Well, it looks like the pair is breaking lower after all!
As you can see on the chart below, USD/JPY bears have been aggressive enough to break below the range support and hit last week’s lows before dollar bulls stepped in to push the pair back up. Are we seeing a downtrend in the making here?
What caught my attention about the 112.50 weekly open price area is that it also currently lines up with a falling trend line resistance that’s been valid since late January. Not only that, but it’s also hitting the 100 SMA on the chart!
Fundamentally, I’m banking on Trump scoring points against Shinzo Abe over the weekend. And I’m not talking about their golf game this weekend.
See, Trump has been calling out Uncle Sam’s major trading partners lately, citing unfair trade practices and even currency manipulation. Japan, in particular, is in a tight spot especially after a report printed earlier this week reflected that the U.S. has the second highest trade deficit with Japan, second only to China.
If Abe succeeds in convincing Trump that Japan isn’t jawboning (ha!) or undermining the U.S. in trading, then we might see the yen retain its current levels. But if Trump insists on jawboning the dollar and/or writes more tweets about how unfair Japan’s trade practices are, then we might see more losses for USD/JPY. Or it might come down to whoever wins their golf game. Who knows?
For now, I’m looking for USD/JPY to make new lows. If the pair drops (and stays) below the 112.00 handle, then the 100.00 MaPs is the next possible support to watch. But if the pair pops up and this “breakout” turns out to be a “fakeout,” then we might be looking at a return to the 115.50 range resistance.
What do you think? Which way will USD/JPY go in the next couple of days?
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