- The trading session on Friday saw minimal activity for the USD/JPY, as it continued to hover around the crucial ¥142 level.
- This ¥142 level has been a notable support zone in the past, leaving us with many uncertainties about the path ahead.
- At this juncture, traders are diligently scrutinizing the actions of the two central banks, particularly in light of the recent move by the Federal Reserve to adjust its dot plot, indicating a potential rate cut in the coming year.
- Such a move exerts a negative pressure on the US dollar, making it increasingly likely that this currency pair will remain under the sway of sellers.
Top Forex Brokers
Conversely, it's imperative to closely monitor the Bank of Japan's actions. They have generated considerable attention recently by hinting at the possibility of normalizing rates. However, when it came time for the meeting, they appeared to hesitate. Consequently, the market continues to exhibit turbulence as both currencies seem to exhibit vulnerability. This suggests that the pair may remain relatively range-bound in the short term.
Uptrend Line in Focus
Nevertheless, should we witness a breach below the prevailing uptrend line, the market's trajectory could lead to a substantial decline, possibly targeting the ¥137.50 level. Conversely, a reversal and an ascent above the 200-Day EMA would likely pave the way for an exploration of the ¥145 level. Any advance beyond this threshold would serve to reaffirm the overarching long-term uptrend, indicating the potential for further upward movement.
Overall, it's prudent to anticipate an impending surge in volatility, although, for now, it appears that we are simply witnessing fluctuations within this region. This is particularly likely over the next couple of weeks as market activity tends to dwindle during the holiday season. In light of these circumstances, a cautious approach is advisable. Nonetheless, for range-bound traders, this market may offer attractive opportunities in the interim. This will more likely than not be the case between the holidays as well, as the liquidity will be suspect at best in this pair, and many others as well.
I would not get too big in any position until we get well past the New Year’s Day celebrations, and as a result will be interested in markets like this one that could clearly define ranges that I can use for guidance.
Ready to trade our daily Forex forecast? Here’s a list of some of the best regulated forex brokers to check out.