US Dollar Continues to Melt Up Against Yen

The US dollar has rallied again against the Japanese yen during the trading session on Tuesday as the market continues to go parabolic. At this point, something has to give. You cannot go straight up in the air forever, so there is no point in trying to chase this market right now. I do believe that given enough time we will probably try to continue going higher, but a pullback has been desperately needed for ages.

When I look at the chart, the most obvious candidate for support on a pullback would be the ¥118.50 level, which is where we have had a cluster previously. Because of this, I think is probably an interesting area to get involved if we get some type of bounce from there. Otherwise, we may have to pull back even deeper, reaching towards the 50 Day EMA.

USD/JPY Video 23.03.22

Now that we have cleared the ¥120 level, we begin to look towards the monthly charts and the ¥122 level that had caused a significant amount of resistance multiple times in the past. This may be yet another reason why we pull back, but at this point in time, I would not short this market without some type of fundamental catalyst pushing at lower. As long as bond yields in the United States continue to go higher, this is going to work in the favor of the dollar against the yen and many other currencies for that matter.

At this point, bond yields show no proclivity whatsoever in trying to fall. While they may eventually, the reality is the market is in a bit of freefall when it comes to yields, so it will be interesting to see if and when this changes.

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