US Dollar Has Explosive Week to the Upside

The US dollar has exploded to the upside during the course of the week, breaking above the crucial ¥115 level. That is an area that will continue to be important, as it is a large, round, psychologically significant figure and an area where we had seen a lot of resistance previously. All things being equal, this is a market could go looking towards the bottom of the weekly candlestick, where we had seen a lot of support near the ¥113.50 level. After that, the ¥112.50 level should offer a significant amount of support, as it has previously.

USD/JPY Video 31.01.22

Looking at this chart, it is still very much in an uptrend, but you should also keep in mind that although the US dollar continues to strengthen overall, the reality is that the Japanese yen is a safety currency as well, so if we do continue to see a lot of panic, the Japanese yen will more than likely signify strength, although in this case we probably would rally a bit, but it would be much less explosive then we have seen as of late.

You should probably keep in mind that the interest rate differential between the two economies also have a major influence on what happens here as well, so having said that you need to pay attention to the differential between the two 10 year notes. It does make quite a bit of difference as to where we go, so ultimately, I think what we have is more consolidation than anything else in the short term, but with a bit of a tilt to the upside.

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