US dollar rallies against Japanese yen on Tuesday
The US dollar went sideways initially during the trading session on Tuesday, but then broke above the 109 handle. The market tends to follow risk appetite in general, because the Japanese yen tends to be more of a safety currency than anything else. The market looks likely to continue going higher and will try to reach the 110 level above which is massive resistance. I think that short-term pullbacks should continue to offer plenty of buying opportunities, and I think that a lot of traders will take advantage of value when it appears. Remember, the US dollar is benefiting from not only risk appetite against the Japanese yen, but also the interest rates rising in the United States bond markets.
If we can break above the 110 handle, the market should go much higher, and I think it will happen given enough time, but I also recognize that it will take a lot of momentum to break out above there. I think the “floor” in the market is closer to the 107.50 level, and it appears that we are trying to form some type of longer-term move to the upside as we had recently bounce from a longer-term uptrend line near the 105 region and have rallied quite significantly. I think that with interest rates likely to continue to rise in the United States for longer-term moves, that should send this market much higher, as we have seen several times in the past.