US Dollar Bounces From 50 Day EMA

The US dollar has initially fallen against the Japanese yen in a bit of a “risk off” type of move, before turning around and bouncing from the crucial 50 day EMA. With that being the case, it does make a certain amount of sense that we would see an attempt to get back towards the double top above. The double top is sitting at the ¥116.33 region, and it looks quite ominous. A break above there would of course be a huge signal to “buy-and-hold” this pair, and it would be a major breakout of significant selling pressure. At that point in time, the carry trade would almost certainly take over.

USD/JPY Video 23.02.22

To the downside, if we were to break down below the bottom of the candlestick for the trading session on Tuesday, we could go looking towards the ¥114 level. The ¥114 level has offered a bit of support a couple of times in the past, so it would make a certain amount of sense that we would see this pair climb from there. Ultimately, I do not like the idea of shorting this pair, simply because of the longer-term trend being so positive. With that, I think if you are looking for a longer-term trade, the rally could get you involved again. I certainly would not be a seller anytime soon, and quite frankly I think we need to break down below the ¥113.50 level to even consider that possibility. Obviously, the Japanese yen been a safety currency will make it somewhat attractive, but the carry trade continues to attract a lot of inflows across-the-board.

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