The US dollar rallied initially against the Japanese yen for the week but continues to find itself attracted to the ¥107.50 level yet again.
The US dollar has rallied a bit during the week but found enough resistance above the ¥107.50 level to roll right back over again. At this point, the market is essentially stuck at this area, as we had formed a bit of a shooting star for the week but was preceded by a hammer. In other words, we are in a trading range that is relatively tight. The longer-term trader is not going to find much to do here but when you look at the longer-term charts and zoom out a bit, you can see that we have been slowly grinding lower. If that is in fact the case that we see a surge lower, the ¥106 level would be supported where we had formed a bit of a “double bottom” as of late.
Breaking down below that level opens up the idea of a move to ¥105, possibly even ¥100 over the longer term. To the upside, the 50 week EMA as offering significant resistance just above at the ¥108.50 level, followed very quickly by the 200 week EMA which is at roughly ¥109.50 after that. In other words, there is a significant amount of resistance above but quite frankly there is not enough selling to get me overly concerned either. This is a battle between a couple of safety currencies and in the world’s current environment, it is not a huge surprise to see that there might be demand for both of them. With that in mind, I think we simply chop back and forth.