US Dollar Breaks Out Against Japanese Yen

The US dollar has broken out during the trading session on Friday to finally clear the ¥116.33 level, which is an area that caused quite a bit of resistance previously. In fact, we have formed a bit of a “triple top” in that area, so it makes sense that we continue to see that area offer a bit of interest, and now I believe it would more than likely end up being support. At this point, I believe that the market will continue to be looking at this as a major inflection point. If we do break down below there, it would obviously change a lot of things.

USD/JPY Video 14.03.22

Having said that, the force of the breakout is worth noting, and therefore I think worth paying close attention to. Ultimately, this is a market that will find plenty of interest, one way or the other. Keep in mind that the interest rate differential between the two countries most certainly favors the US, and if the Federal Reserve is rather hawkish next week, that could also come into the picture as well.

To the upside, I see this pair looking towards the ¥118 level, and then eventually the ¥120 level. The market most decidedly is positive, and therefore I think given enough time we will see that attempted. The size of the candlestick is rather impressive, so that is something worth paying attention to as well.

Even if we do break down from here, the ¥115 level is an area that the 50 Day EMA shows up as support, and therefore I think that your new “floor in the trend” going forward. Ultimately, this is a “buy on the dips” market.

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