US Dollar Gives Up Early Gains Against Yen

The US dollar has initially tried to rally during the trading session on Monday in reaction to the weekends headlines, but quite frankly it seems as if we are trying to chill out a bit and pull back into the previous consolidation area. The market is likely to see the ¥115 level underneath to be important, especially with the 50 day EMA grinding higher. Looking at this chart, I also see that we could be forming a bit of an ascending triangle, which does suggest that we will eventually take off to the upside. I think that given enough time we probably will see that happening for no other reason than the fact that we have so much in the way of interest rate differential between the two countries.

USD/JPY Video 01.03.22

That being said, we are starting to see traders price out the idea of the basis points being the rate hike in March, mainly due to the idea of geopolitical concerns. Having said that, the market is likely to continue to see the differential favorable for the greenback, and this will get a bit turbocharged if we get more of a “risk on” type of attitude as people will try to walk away from the Japanese yen. Ultimately, this is a market that I think will continue to be very choppy, but I still like the idea of buying on dips. The ¥113.50 level underneath should offer support, and I think that is about as low as we go unless of course there is a major shock to the system and people start running towards the Japanese yen.

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