US Dollar Hangs on the ¥115

The US dollar has found itself to be a bit resilient, bouncing from the 50 day EMA and reaching back above the ¥115 level. Part of this could be due to the fact that the Americans and Russians are going to be meeting in the next few sessions, and therefore a little bit of the fear trade may have come off. That being said, it will be interesting to see whether or not we can get above the double top sitting just above. Because of this, the market is likely to continue to see a lot of noisy trading.

USD/JPY Video 21.02.22

If we were to break down below the 50 day EMA, it is likely that we could go looking towards the ¥113.50 level, an area that has been important previously. Whether or not that holds is a completely different question, but at this point in time I would anticipate that the “floor in the market” is closer to the ¥112.50 level underneath, where the 200 day EMA is reaching. That being said, the market continues to see a lot of bullish pressure overall, so I do not think we get to that level anytime soon.

To the upside, the double top that sits at the ¥116.33 level is a very difficult area to get above, so if we did break above there, I think it would tell us just how bullish the market is, and it could send the pair into more of a “buy-and-hold” type of situation. Interest rate differentials continue to favor the US dollar, so all things being equal, that could be what happens but keep in mind that the Japanese yen is considered to be a safety currency in the event of a “risk off” situation.

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