US Dollar Continues to Grind Higher

The US dollar has rallied a bit during the course of the trading session on Tuesday as we continue to see upward pressure in general. The ¥115.50 level could offer a little bit of resistance, but if we can break above there then the market will almost certainly go back towards the highs. A lot of this is going to come down to interest rate differential, which continues to favor the US dollar against the Japanese yen. Ultimately, the Bank of Japan has no interest whatsoever in seeing higher interest rates, so this should not be a huge surprise. Given enough time, I anticipate that this market will continue to go much higher, perhaps being a “buy-and-hold” type of situation.

USD/JPY Video 09.02.22

Pullbacks at this point should be supported either at the ¥115 level, or perhaps the 50 day EMA. If we were to break down below the 50 day EMA, then we could have a more serious pullback towards the ¥113.50 level, possibly even the ¥112.50 level. The 200 day EMA is sitting in that general vicinity, so I think that is probably about as low as we can go. If we were to break down below that, then it would almost certainly be the end of the overall uptrend and send this market much lower. At that point in time, it would probably be a bit of a general run towards safety, and therefore we would probably see the Japanese yen do well against most currencies, not just the US dollar. If you choose not to trade this pair, you can always use it as a general gauge as to where other Japanese yen related pairs should end up.

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