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USD/JPY Price Forecast – US Dollar Plunges Against Japanese Yen

The US dollar initially tried to rally during the trading session on Friday, reaching towards the ¥105 level before selling off again. That is of course a large, round, psychologically significant figure, so having said that it is likely that a lot of traders were looking to take advantage of that. To the downside, if we were to break down below the ¥104.33 level on a daily close, that should open up much more significant selling. Ultimately, this is a pair that is highly sensitive to risk appetite, so this could give us a bit of a “heads up” as to what may be going on under the hood of most markets. That being said, I think it is only a matter of time before we reach towards the ¥102 level which is the next support level.

USD/JPY Video 21.09.20

In the meantime, if we were to rally from here, I think it is only a matter of time before we sell off again. I am looking to fade short-term rallies that show signs of exhaustion, and therefore I am looking for short-term charts to take advantage of this trade. What is interesting is that it looks like we have a significant amount of risk aversion out there, so therefore we may see the US dollar we can against the Japanese yen but strengthen against multiple other currencies out there. I like the idea of using this as a secondary indicator as well, because quite frankly if we break down here, and the US dollar strengthens against other currencies, you may be looking to cross everything involved and perhaps short the GBP/JPY, NZD/JPY, and AUD/JPY pairs.

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This article was originally posted on FX Empire

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