US dollar rallied against Japanese yen to open the week
The US dollar rallied significantly during the trading session on Monday, as we reached towards the 109.50 level. If we can break above that level, it’s likely that the market probably goes to the 110 handle. The 110 level above is resistance, and I think it will take a significant amount of momentum to finally break above there. I would anticipate several short-term pullbacks to build up the necessary momentum, but once we get it I think that the market can go much higher. Once we break above the 110 handle, we should then go looking towards the 112.50 level above, which has been important more than once.
Alternately, I like the idea of buying this market on dips, with the 109 level being a major support level over the last couple of days. The 108.50 level underneath there is also support. Beyond that, then I think we would “reset” near the 107.50 level underneath, where there is a bit of a gap from the previous week. Ultimately, I think that this is a market is one that you can buy on the dips, looking for signs of support. I believe that the US dollar will continue to not only rally from a “risk on” perspective against the Japanese yen, but we also have interest rates rising in America, which of course helps the currency as well. Unless we get some type of massive selloff in risk appetite, I think we will eventually break out to the upside.