US dollar falls initially against Japanese yen only to recover on Tuesday

The US dollar has fallen significantly against the Japanese yen during the trading session on Tuesday, reaching down to the ¥108.50 level before bouncing again. We have bounced towards the ¥109 level, an area that was previous support, and I think that it should now be resistance. However, if we do get more of a “risk on” move, especially after it looks like the Americans and North Koreans may talk after all, we could get a move towards the ¥110 level. If we can break above that level, the market should continue to go much higher, perhaps reaching towards the ¥111 level. Otherwise, if we break down below the lows from the session on Tuesday, we will more than likely find support again at the ¥107.50 level underneath, as it was major resistance.

Ultimately, I think that the market will eventually continue to go higher, but we may have a bit of noise to deal with in the meantime. The US dollar should continue to show signs of strength in general as we have higher interest rates, but if we do get some type of geopolitical concerns in the stock markets, it could show up in this market as well and send us lower. One of the biggest drivers of fear right now seems to be the situation in Italy, with the bond markets falling. Overall, I believe that the volatility in this market should continue, so keep that in mind. You need to have a small position to start out with, and then only add as confidence in the market builds.