US Dollar Recovers After Initial Plunge

The US dollar initially plunged during the trading session on Thursday to reach down towards the ¥114.50 level, before turning around and rally towards the ¥115 level yet again. The market has been paying close attention to the 50 day EMA, and it looks like that is what we are trying to hang onto yet again. We have been going higher for a while, so it does make a certain amount of sense that we get a little bit of follow-through. That being said, there has been a bit of a pullback towards the Japanese yen as more starts in Ukraine, but it seems that it is somewhat limited in its scope.

USD/JPY Video 25.02.22

We will continue to see a lot of volatility, but quite frankly this is a market that has been in an uptrend for quite some time due to interest rate differential, and that will more than likely continue to be the case. After all, the Federal Reserve is very likely to continue tightening going forward, so at that point in time it is likely that we see more money attracted to the greenback than the Japanese yen, unless of course is a major “risk off” type of headline coming out of Ukraine. Other than that, I think we probably continue to see buyers in on dips, because quite frankly that is the way it has been for a while.

To the upside, the ¥116.33 level has offered quite a bit of resistance, perhaps forming a bit of a “double top”, which of course is a major resistance barrier that we will have to tackle, but if we can get above there, this market will become a “buy-and-hold” type of market. To the downside, I think the ¥113.50 level is a significant support area.

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