A few days ago we were speculating about what would happen to the Japanese currency in case of a correction in the stock markets. On Friday, the American stock market was declining for the second consecutive day. This has not happened since mid-June. We cannot even call it a small correction yet. The decline was only 2%. But what is happening in the pair dollar/yen?
Above is the weekly chart of this pair. It is not the usual daily timeframe, but the weekly one. To visually easier understand the potential of the movement. The nearest target, if the correction in the stock market will continue, is 100 yen for 1 USD. And then the abyss opens.
Our readers may argue. In spring, on the decline, the pair did not go below 100. Yes, it did. But there’s a big difference. In the spring, there were not yet trillions of new dollars in the market. And now there are. And there’s pressure on the U.S. dollar, which started falling to all currencies.
To get an even better idea of what’s going on, you should look at the monthly chart. And remember where this pair was against the background of quantitative easing after the 2008 crisis. So, during several years dollar/yen pair was significantly below the level of 100. And it was going down to the values of 75 USD/JPY. Although it’s hard to believe it now.
At the auction on Friday, yellow metal grew for 6 consecutive days. From the highs of the day only about $ 15 left to the top, which was shown in 2011. Theoretically, there is no reason why we won’t see a new all-time high this week.
Further the situation can develop in 2 ways.
• The market will make a small correction related to profit taking. And then there’ll be a small flat again.
• The market on the contrary will accelerate to reach the level of $2000 as soon as possible.
What’s waiting for us today?
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