USD/JPY Price forecast for the week of March 26, 2018, Technical Analysis

The US dollar initially tried to rally during the week, but then broke through the trendline that had been so important previously. By breaking through the 105 level, this is deafly a sign that things are deteriorating in the risk appetite of traders. If we break down below the bottom of the weekly candle, the market could unwind down to the 101 handle, but obviously that’s a longer-term trade. If we get an escalation of trade war talks, then this pair will accelerate to the downside. I believe that this pair is going to struggle to rally until we get some type of resolution coming out of both China and the United States, something that we will probably not see in the near term.

USD/JPY Video 26.03.18

Because of this, I suspect that money will go running to the relative safety of the Japanese yen, and by breaking through the downtrend line, we have certainly started that process. It’s not to say that it will be easy to hang on to this trade, just that there is obviously a lot of pressure here. I suspect that it’s not until we break above the 107.50 level that huge amounts of money will come into the upside, but it could happen rather rapidly if things get settled between China and the United States.

Currently, I don’t have any interest in buying until we make that impulsive move to the upside, and it just doesn’t look like it’s ready to happen. That’s not to say that it will be noisy, this pair always is. I believe that the 101 level is the beginning of a major bottom in this pair. That was probably the target for the sellers.