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US Dollar vs Japanese Yen Technical Analysis
The US dollar has gone back and forth during the course of the trading session, showing signs of hesitation. That does make a certain amount of sense considering that the pair has gone straight up in the air. The fact that the market has broken significantly above the ¥145 level of course is a bullish sign, so I do think that is probably only a matter of time before we go higher. Keep in mind that the Bank of Japan continues to keep interest rates very low, and therefore I think it continues to work against the value of the Japanese currency. However, it’s not as if the market can go in one direction forever, but it certainly could go much higher.
A pullback from here opens up the possibility of a move down to the ¥142.50 level, which I look at as the potential “floor in the market at the moment”, as not only has it been important in the past, but we have seen the 50-Day EMA racing toward it.
All things being equal, I do believe that the US dollar eventually goes looking to the ¥147.50 level, followed very quickly by the ¥150 level. Ultimately, this is a scenario where the market will continue to find reasons to go higher, but I do think at this point in time we may need to pullback in order to offer little bit of value. That’s fine, because I continue to buy this market on dents and add to a bigger position as the interest rate differential get you paid at the end of every session.
All things being equal, I just don’t see a situation where we would be a seller, and therefore I think you got a situation where the market will continue to find plenty of buyers, but if the Bank of Japan were to suddenly change its monetary policy, then it could change a lot of things. Furthermore, the US dollar is quite often used for safety as well, so it all ties together for this market going higher over the longer-term, perhaps for quite some time.
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