USD/JPY lower with U.S. Dollar Weakness

The relationship between the Dow Jones and U.S. Dollar Index has been opposite and as the risk appetite is returning to the market with yesterday’s 172 point rally in the Dow, the U.S. Dollar’s flight to safety trade was unraveling.  The U.S. Dollar continues to sell off with good data and news and this is allowing the USD/JPY to rally against it as seen with today’s breakdown across the intraday timeframes.

The 60 minute Reversal Channel Down alert indicates a small amount of trending activity but also shows what little trend there is as down. This can be seen by 1)  the low Initial Trend and 2) the Channel Down
pattern’s resistance (green).

What’s interesting about the USD/JPY’s price action is that is it following the U.S. Dollar’s lead right now and did not participate at all with the equities rally which is usually the case for the pair known as the “risk barometer”.  The USD/JPY is normally a pair that reflects risk appetite and and risk aversion but did not track with the rally in stocks at all.

As long as the USD/JPY is tracking with the U.S. Dollar keep an eye on the breakdowns that are likely to continue to occur on the intraday timeframes.  Any intrday corrections could also be opportunities to
play resistance levels like the one on the 60 minute chart at the green downtrend line.