US Dollar Levitating Against Yen

The US dollar has been rather quiet against the Japanese yen on Wednesday as we await the Federal Reserve statement. While traders already know that there will be a 25 basis points rate hike, the reality is that there are questions as to whether or not the Federal Reserve will be willing to sound as hawkish as they have in the past, or if they are going to have to pay close attention to the markets, and perhaps loosen monetary policy as there is so much in the way of uncertainty going forward.

USD/JPY Video 17.03.22

The move to the upside had been a bit parabolic though, so it would make a certain amount of sense that the market may have to hang out here, or better yet, pull back a bit in order to build up the necessary momentum to continue to go higher. The ¥116 level would be an area that comes into the picture as potential support, not only due to the fact that it was previous resistance, but it is also where the 50 Day EMA is racing towards at the same time.

On the upside, if we were to break above the little area that we are in right now, it is very likely that we go looking towards the ¥120 level. In general, this is a market that I think continues to see a lot of upward pressure longer-term, but we have gotten far ahead of ourselves and probably need to see some type of either settling or pullback in order to offer value. Pay attention to the interest rate differential between the two economies going forward, because that will be the main driver.

For a look at all of today’s economic events, check out our economic calendar.