US Dollar Continues to Pressure Upside

The US dollar has rallied a bit during the trading session on Wednesday. The ¥115 level underneath is rather significant support, as the 50 day EMA is racing towards that area as well. That being said, there is a double top above that could cause a lot of resistance. The ¥116.33 level has offered quite a bit of resistance, so if we get above there then I think it becomes more or less a “buy-and-hold” type of market.

USD/JPY Video 17.02.22

Keep in mind that the interest rate differential is going to continue to be a major driver of where we go next, and of course that does favor the United States. However, if we were to turn around and get a huge “safety bid” to force people back into the Japanese yen, it is possible that we could break down towards the ¥113.75 level. Either way, I still think it is much easier to buy this market than it is to sell it, so looking for little bits and pieces of value will probably continue to be the best way forward.

If we were to break down below the ¥113.50 level, then we probably drop towards the 200 day EMA, possibly even lower than that. All things been equal, I think you probably see a lot of choppy behavior more than anything else but at the end of the day it is likely that we will see much more buying than selling. That does not mean that is going to be easy, but it certainly looks as if the uptrend is very much intact at this point in time. Volatility continues to be a major issue.

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