The US dollar has rallied on Friday, but it did spend most of the week falling, as the Japanese yen picked up quite a bit of momentum due to the “risk off trade” that had come into play. The ¥110 level course is an area that attracts a lot of attention and that is where the market seems to be gravitating towards. That being said, if the market were to break down below the bottom of the candlestick for the week, I think we have further to go, perhaps reaching as low as ¥108, possibly even down to the ¥107.50 level as well.
To the upside, I see a significant amount of exhaustion above, so at this point I would be a bit cautious about buying this pair. Yes, it could go higher, and it is certainly in a bit of an uptrend recently, but it is worth noting that the ¥111 level begins significant resistance all the way to the ¥112 level. You can see this on the monthly charts, so course that is something worth paying close attention to. Ultimately, this is a market that I think continues to be very choppy in general, and it might have a better use as an indicator more than anything else.
After all, the pair does tend to rise and fall with risk appetite around the world, so if you start to see this pair fall, that is generally a good sign that indices in the like are probably going to suffer. Furthermore, it can give you a guideline as to what happens with the Japanese yen against other pairs, ones that do not necessarily have massive barriers just above or below.