US Dollar vs Japanese Yen Technical Analysis

The U.S. dollar has rallied a bit during the trading session as it looks like we’re trying to take out the 156 yen level. If we can clear that area then the market could go higher, perhaps reaching the 158 yen level. Short-term pullbacks continue to be interesting, and I do think they end up being buying opportunities, with the 155 level underneath being potential support. It was a previous resistance level. If we break down through there, then the 50-day EMA offers plenty of support, which is near the 153 yen level.

In general, I think you continue to buy dips because the interest rate differential will continue to favor the US dollar quite drastically. And of course, the Bank of Japan really can’t do anything about this. Yes, they intervened recently, but that’s a temporary measure and they’ve already lost about half of their traction from that move. Ultimately, I think the 160 yen level above ends up being a barrier that we will pay close attention to. And if we can clear that, then we can go much higher.

This is a market that has been strong for some time, and you get paid at the end of every day to hang on to it. So, with that being said, I think you’ve got a situation where you just stay long. I’ve been long of this market for months, and that doesn’t change. Every time we pull back, I add a little bit. Right now, there’s just no way for the fundamentals to change because of the massive debt load in Tokyo.

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This article was originally posted on FX Empire


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