US Dollar Gives Up Early Gains

The US dollar has initially shot higher against the Japanese yen during trading on Tuesday but has shown a bit of lackluster momentum as we have turned around. The market continues to look at the ¥115 level as a potential magnet for price, and I think we will continue to see a lot of noise in that vicinity. Because of this, I would anticipate that this market continues to be very choppy and noisy, but at the end of the day, we are still very much in an uptrend.

USD/JPY Video 02.03.22

When I look at this chart, it is easy to see that the 50 day EMA has been important more than once, so I think we probably have a situation where the market will simply use it as potential support, and even if we breakdown below there I think there are enough buyers just below the area to get involved as well. The ¥113.50 level is an area of interest as far as I can tell, right along with the ¥112.50 level. In other words, this remains very much a “buy on the dips” type of situation going forward, and I just do not see that changing due to interest rate differentials.

Yes, there is a certain amount of a safety bid built into the Japanese yen, but at the end of the day, the US dollar is also considered to be a safety currency so even if the Japanese yen suddenly becomes the favored currency, this pair will fall much slower than some of the other ones. I remain cautiously optimistic at this point in time as it looks like we are trying to form a major ascending triangle.

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