US dollar rallies against Japanese yen to open the weekThe US dollar continues to see strength overall, as we rallied against the Japanese yen during the open of the week. The 109 level continues to offer a significant amount of support, and I think that the market is trying to build up enough momentum to finally break towards the 110 handle. If we can get above there, then we are free to go much higher. However, expect a lot of choppiness.
The US dollar has rallied against the Japanese yen during the open on Monday, breaking above a little bit of short-term resistance, and then consolidating near the 109.25 region. I think the market should continue to go higher, perhaps reaching towards the 110 handle, but it doesn’t mean that is can be easy to do so. I believe that over the longer term, we will of course have US dollar strength based upon higher interest rates and of course the Bank of Japan looking likely to stay ultra-loose with its monetary policy for the long term.
I believe that the 108.80 level underneath should be support, and it’s not until we break down below there that I would be concerned. Even at that point, I anticipate that we will probably look towards the 108 handle, and perhaps even the 107.50 level. Ultimately, I do think that we break out but it’s going to take a certain amount of work, and certainly a lot of momentum. If we can break above the 100 handle, that will probably coincide with either a spike in interest rates, or perhaps more of a “risk on” move as sometimes the S&P 500 and the USD/JPY pair had a very strong correlation. Ultimately, I think you can inspect a lot of volatility but certainly I lean more towards the upside as I believe the US dollar is going to have a strong summer.