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USD/JPY Weekly Price Forecast – US Dollar Tests Resistance for the Week

The US dollar has rallied significantly during the course of the week, to reach towards the ¥111 level. This is an area where we have seen a bit of a pushback recently, as it has been resistance more than once. The shape of the candlestick is somewhat bullish, but we did give back quite a bit and that is worth paying attention to. On the daily chart, we have a bit of divergence going on between price and the MACD indicator underneath.

USD/JPY Video 21.05.21

However, if we were to break above the ¥111 level, then it is likely that we could go looking towards the ¥112 level which is an area that the market has paid close attention to previously. The fact that we pulled back from there and we have the previously mentioned divergence suggests to me that we are not ready to break out yet. That being said, it is difficult to short this market, so I will use this more or less as an indicator of what to do with the Japanese yen against other currencies. After all, when you want to know what the true strength of the currency is, you need to measure it against the US dollar.

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Underneath, I see the 200 week EMA reaching towards the ¥180 level, and I think that would be massive support. However, if this market falls I will probably short something like AUD/JPY, not necessarily this pair. After all, there could be a bit of “push pull” as the US dollar might be strong against everything with the exception of the Japanese yen, thereby making it fall much slower here than other currencies against the yen.

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This article was originally posted on FX Empire

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