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Abstract:The US dollar has drifted lower against the Japanese yen during the trading session on Wednesday as the world awaited the Federal Reserve.
The US dollar has broken down a bit during the trading session on Wednesday as we await the Federal Reserve. The pair is currently trying to break through significant support, roughly around the ¥103.25 level. If we can break down below there it is likely that this market will go looking towards the ¥102 level, which is an area where we had seen significant bullish pressure previously. With that being said, I do believe that this will be the base case scenario given enough time.
This does not mean that the market breaks down below there right away, just that we could very well continue to see a lot of US dollar selling, especially if the Federal Reserve does in fact extend its purchase programs that have been so bearish for the greenback. The default scenario of course is that they will do something to help out Wall Street, which means that the US dollar will lose value. At this point in time, the market is forming a massive descending triangle, which of course the rest of the world sees just as easily as we do, so one would think that it is only a matter of time before we get some type of significant move.
As far as buying is concerned, I have no interest in doing so but would have to consider it on a break above the 200 day EMA which is all the way up at the ¥106 level, meaning that this will not be something to worry about anytime soon. Ultimately, I do believe that we break down and I think that we continue to “sell short-term rallies” as a general rule in this pair.
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Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.