US Dollar Pulls Back From Major Resistance Barrier

The US dollar has pulled back from the ¥118 level, an area that has been important more than once. Because of this, I think it will be worth paying close attention to this area, because if we can break above there, then it will more than likely open up the possibility of the market becoming more of a “buy-and-hold” type of situation. That being said, it is very likely that we will continue to see more of a pullback in order to build up the necessary momentum to get long again.

USD/JPY Video 16.03.22

The market is stretched, so it is a little bit overdone. With the Federal Reserve meeting this week, a lot of people will be paying close attention to what comes out of that meeting, and whether or not it sounds as hawkish as it had been previously. Ultimately, this is a market that I think will probably be difficult to say the least, unless of course you can step back and wait for some type of value to appear. Pullbacks are probably going to be necessary, so with that being the case, the ¥116 level underneath is going to be a potential support level. The 50 Day EMA breaking above the ¥115 level suggests that we are in fact going to continue to see buyers coming in on this dip.

The one thing that could change this is if the Federal Reserve suddenly changes its tune on the idea of fighting inflation. If they were to do that, the interest rate differential between the two currencies may drop a bit, thereby changing things. However, I would not hold my breath for that.

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