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US Dollar Bounces Back Into Consolidation

By:
Christopher Lewis
Published: Mar 2, 2022, 14:45 UTC

The US dollar has rallied during the course of the trading session on Wednesday to show signs of resiliency. The market remains in consolidation.

US Dollar Bounces Back Into Consolidation

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The US dollar has rallied against the Japanese yen during trading on Wednesday to break back above the ¥115 level again. By doing so, the market looks as if it is going to continue to try to break to the upside, but we need to see that through the prism of buying on the dips, simply because we do not have enough momentum to break above that massive double top above. If we do clear the ¥116.50 level, then the market is very likely to continue going higher, in more of a “buy-and-hold” type of situation.

USD/JPY Video 03.03.22

On the downside, we have the 50 Day EMA coming into the picture and tilting higher. This should continue to offer a significant amount of support going forward, offering the possibility of a bit of a trendline, as the market does tend to pay quite a bit of attention to this indicator as setting the trend.

If we do break down below the 50 Day EMA, then the next support level will be near the ¥113.50 level, and then possibly the ¥112.50 level after that. There will be plenty of reasons to believe that there are buyers underneath unless, of course, we get some type of meltdown where everybody runs to the Japanese yen for safety. Even if that is the case, this pair will fare better than many other yen-related pairs, as the US dollar is also a safety currency, but not as prized as the Japanese yen in times of extreme fear. All things being equal, we have a major divergence with interest-rate policy between the two central banks, so that should continue to put a bit of a bid in the US dollar.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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