The US dollar initially tried to rally against the Japanese yen during trading on Monday but fell backwards to reach towards the ¥109 level. This is an area that is going to be exceedingly difficult to navigate, because the ¥110 level above is very psychologically important. If we can break above the ¥110 level, that would open up the door to even higher levels, reaching towards the ¥111 level.
Looking at this chart, it makes quite a bit of sense that we could pull back to the 200 day EMA, and if we do see this play out, it could be more of a “risk off” type of situation. After all, the Japanese yen is considered to be a safety currency, and of course people will buy into it if they are getting a bit concerned.
USD/JPY Video 09.06.20
On the other hand, if we do break above the ¥110 level, it may very well be an opportunity to buy other currencies against the yen as they have a lot less in the way of noise above. It is not that you cannot buy the USD/JPY pair, it is just that you might get better reactions out of other currencies that are currently on fire anyway, such as the Australian dollar, New Zealand dollar, or British pound. In other words, you can use this pair as a bit of an indicator, as to the relative strength of the Japanese yen if it does in fact break higher. If it breaks down, pay attention to those other markets because they might offer better trades.
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