US dollar rallied initially on Wednesday, to reach towards the ¥106 level. An area that has caused resistance, so we will probably struggle to continue higher.
The US dollar initially rallied during trading on Wednesday, reaching towards the ¥106 level. This is an area that has been resistance more than once, so it would not be much of a surprise to pull back from here. If we do, the ¥105.50 level is a very likely candidate for targeting, as it has been an area of interest recently. Because of this, short-term rallies that show signs of exhaustion will probably continue to be faded, as there is little reason to think that the market will suddenly change.
The noise during the day was Donald Trump tweeting that there should be some type of stimulus check released soon suggests that there is the possibility of some type of compromise, and therefore markets got hopeful again. Having said that, that is a long cry from something actually happening, so there is no reason to think that the longer-term trend will suddenly change. Because of this, I suspect that traders will continue to fade off of the short-term charts, and I would not look for some type of explosive move.
In fact, I do not necessarily have a scenario in which I am willing to start buying this pair. I do not necessarily think we are going to suddenly break down drastically, but this is a market that clearly has a lot of issues. Because of this, I like the idea of trading on the short-term charts still, and I think that 20 or 30 pips is about as big as each move will be under normal circumstances, so that is how I will trade this market.
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