The US dollar bounced a bit during the day on Thursday against the Japanese yen, as it looks likely that we are trying to form some type of basing pattern. However, we may have some work to do before we can put a lot of money into this pair again.
The US dollar has rallied slightly against the Japanese yen during the day on Thursday, showing signs of resiliency. There is a lot of support extending down to the ¥109 level, so no matter what happens, I’m not willing to short this market until we break down below that level. I believe that if we do break above to make a fresh, new high again on the one-hour chart, then we will probably go looking towards two higher levels. I think that the ¥112.50 level above should continue to be a target longer-term, but obviously we have a lot of volatility to chew through. That’s nothing new with this pair, it is sensitive to not only interest rate differentials, but risk appetite as well.
If we were to break down below the ¥109 level, I think at that point we will probably go down to the ¥106 level over the next several days. Ultimately though, it looks as if we are trying to form a bottoming pattern, which of course may take some time to complete and trigger. Ultimately, I think that is a real likelihood, especially if the bond markets start to sell off again in America as interest rates look likely to go much higher. Pay attention to the 10-year note, if the yields spike above 3.1% again, that should turbocharge this market to the upside. The same can be said if the stock markets takeoff as well.
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.