During Friday's trading session, the US dollar experienced significant weakness, plunging below the crucial ¥142.50 level. This level has historically held importance, suggesting a potential rebound in the near future. However, considering the extended length of the candlestick, it is highly probable that further downside pressure may persist.
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Nonetheless, it is important to recognize that the market remains in an overall uptrend. Consequently, it is advisable to exercise caution and avoid attempting to time short-term market fluctuations. The upward trajectory of the US dollar is primarily driven by the Bank of Japan's loose monetary policy, which continues to weaken the Japanese yen. However, the trading session on Friday indicated that the market is likely to remain volatile. While short-term conditions may have become overextended, it is crucial to view this as a temporary reaction to the jobs report.
The Non-Farm Payroll data revealed the addition of 209,000 jobs in the previous month, falling short of the anticipated 225,000. Moreover, downward revisions to the prior month's figures have led some traders to speculate that the Federal Reserve might not maintain its current tight monetary policy stance, considering potential global economic slowdown concerns. However, such assumptions may be premature, and it is reasonable to expect a reversal in sentiment in due course.
Given these circumstances, it is advisable to seek potential areas of support and look for opportunities to reenter the market on the upside. Shorting the market is not recommended. Notably, the 50-Day EMA aligns near the ¥140 level, which also coincides with the upper boundary of a bullish flag pattern. Therefore, it is expected that stability will need to be established before considering long positions.
- The US dollar faced significant pressure during Friday's trading session, slipping below the important ¥142.50 level.
- While a potential rebound from this level is conceivable, the extended length of the candlestick suggests that further downward pressure may persist.
- Despite short-term fluctuations, the overall trend remains upward, primarily influenced by the Bank of Japan's loose monetary policy.
The reaction to the Non-Farm Payroll data indicated market volatility, with potential concerns about the Federal Reserve's policy stance. However, it is advisable to exercise caution and await more stable market conditions before considering long positions. Shorting the market is not recommended. Looking ahead, it will be crucial to monitor potential areas of support, particularly around the ¥140 level and the bullish flag pattern boundary.
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