US Dollar Continues to Go Higher During the Week

The US dollar has rallied significantly to reach towards the ¥116.30 level above, where we had pulled back from previously. At this point, it looks a little bit like a double top on the daily chart, but I would not be a seller of this market. Quite frankly, I think there are plenty of buyers underneath waiting to take advantage of this market, due to the fact that there is a huge bond yield differential between the United States and Japan. I think that the ¥115 level of course is an area that has previously been resistance and should now be support.

USD/JPY Video 14.02.22

That is not to say that we can break down through there, and if we do then there is a huge amount of noise between that level and the ¥113 level or so. I would anticipate that there should be plenty of buyers in that general vicinity, so I look at pullbacks as a potential value play that we can take advantage of. All things being equal, I think this is a market that will continue to see a lot of volatility, but I do think eventually we get a little bit of momentum to the upside that can allow this market to go higher.

That being said, if we were to break down below the 100 will ¥0.50 level, then I think you could start to see a bit of a trend change. In the short term though, it certainly looks as if it is a bullish market trying to stretch its legs, but we might be a little extended at this point to continue without some type of pullback.

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